Employee Performance Model: Analysis of Transformational

Leadership, Organizational Culture, and Innovation: Survey at

Directorate General of Customs and Excise of Indonesia - East Java 1

Regional Office

Mochamad Mulyono

, Ma’ruf Akbar

and Madhakomala

Student of Postgraduated Universitas Negeri Jakarta (UNJ) Indonesia

Senior Lecturer of Postgraduated Universitas Negeri Jakarta (UNJ) Indonesia

Keywords: Transformational Leadership, Organizational Culture, Innovation and Performance

Abstract: This study aims to analyze the effect of transformational leadership and organizational culture on innovation

and employee performance at the Directorate General of Customs and Excise East Java I. The population of

this study was employees of the East Java Customs Office I with a total of 317. The sample size in this

study was determined through Slovin formula with a 5% margin error, so as to obtain a sample of 177

employees. Quantitative analysis method using path analysis (Path Analysis), followed by partial hypothesis

testing (t test) with alpha 5 percent (0.05). Before further analysis, the requirements test was carried out

through normality and regression linearity. Analysis tools using SPSS version 22.0 for Windows. The

results of the study show that transformational leadership, organizational culture, and innovation affect

performance, transformational leadership and organizational culture influence innovation, and

transformational leadership influences organizational culture.

1 INTRODUCTION

The development of a nation generally relies heavily

on tax revenues, not least in Indonesia. With such

conditions, the government work unit that is given

the task and responsibility of collecting taxes has a

very strategic position. Directorate General of

Customs and Excice, abbreviated as DJBC, which

has a role as state revenue from the import duty,

customs duty and excise tax sectors, and tax

collection in the framework of imports.

The duties, functions and roles of DJBC are very

important and strategic for the Indonesian economy,

especially in supporting the Indonesian economy.

Role as a revenue collector is still the main

performance measure for DJBC because Indonesia

still relies on revenue from the tax sector to finance

the state budget.

Although the role of DJBC is not only as a

collector of state revenue in the import duty, export

duty and excise sector, but the role of revenue

collector is the main role that is used as the Main

Performance Indicator in the performance of DJBC

in general, including in vertical offices, namely

offices area and office of customs and excise

supervision and service. Each year the performance

of the regional offices and the customs and excise

service and supervision office is measured from the

achievement of the targets set.

According to Gibson, Ivancevich and Donnelly

(2004), individual performance is the basis of

organizational performance, which means a decrease

in organizational performance can be caused by a

decrease in the performance of employees, or

conversely employee performance increases will

result in increased organizational performance.

One of the important pillars of institutional

transformation in DJBC is the leadership factor. The

Directorate General of Customs and Excise as a

government agency that has strategic duties and

functions that not only function as revenue collectors

but also function as community protectors, trade

failitation and support to the industry, of course

requires effective leadership to carry out these

functions. The concept of leadership developed in

the phase of institutional transformation is a type or

transformational leadership style. Transformational

Mulyono, M., Akbar, M. and Madhakomala, .

Employee Performance Model: Analysis of Transformational Leadership, Organizational Culture, and Innovation - Survey at Directorate General of Customs and Excise of Indonesia - East

Java 1 Regional Ofﬁce.

DOI: 10.5220/0009510508810889

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 881-889

ISBN: 978-989-758-432-9

881

leadership is used as teaching for leadership training

in the Ministry of Finance. Through the

transformational leadership training, it is expected

that leaders or officials in DJBC will be

transformative, which is characterized by the

influence of idealism, inspirational motivation,

intellectual stimuli, and wise individual

considerations can encourage subordinates to show

their best performance. This is in accordance with

the results of research by Jyoti and Bhau (2016) and

Jenewein and Schmitz (2007) which prove that

transformational leadership influences performance.

In addition, another factor that has become an

emphasis in institutional transformation in DJBC is

organizational culture. When the organizational

culture is conducive, reflecting behavior patterns,

assumptions, norms, values, beliefs, and ways of

acting that are believed, felt and carried out and

agreed upon by members of the organization can

also encourage performance improvement. This is in

accordance with the results of Tobing and Syaiful's

research (2016) which prove that organizational

culture influences performance.

In addition, other studies show that innovation in

addition to influencing performance is also

influenced by transformational leadership and

organizational culture. As shown in the research of

Park, Moon and Hyun (2014) and Nusair, Ababneh,

and Bae (2012) that empirically transformational

leadership has a positive and significant effect on

innovation. Then the results of research by Nham,

Pham, and Nguyen (2014), Yeşil and Kaya (2012),

and Daher (2016) show that organizational culture

influences innovation. In addition, organizational

culture besides influencing performance and

innovation is also influenced by transformational

leadership. As shown in the research of Aydogdu

and Asikgil (2011), Al-Sardieh (2012) and Mukhtar

et. al (2016) that transformational leadership

influences organizational culture.

2 THEORICAL FRAMEWORK

Performance

According to Catherine (2009) performance can be

interpreted from two perspectives, namely

performance as behavior and results. Performance as

a behavior, among others, is defined by Rotundo and

Sackett in Catherine (2009) as follows, job

performance typically conceptualized as actions and

behaviors that are under the control of the individual

that contributes to the goals of the organization.

Performance is usually conceptualized as actions

and behaviors that are under the control of

individuals who contribute to organizational goals.

Brumbrach as quoted by Armstrong (2009) states

that performance means both behaviors and results.

Behavior emanates from the performer and

transform performance from abstraction to action.

Not just the instruments for results, but also the

results of their own right - the product of mental and

physical effort, applied to tasks - and can be judged

apart from results.

According to Wibowo (2009) performance is the

result of work or work performance. Yuniarsih and

Suwatno (2008) also suggest that performance is a

real achievement that is displayed by someone after

the person in charge performs their duties and roles

in the organization. While Sutrisno (2011) argues

that employee performance is an achievement that is

obtained by someone in carrying out a task.

Transformational Leadership

Every organization needs leadership. This urgency is

related to the strategic position of leadership for the

dynamics and survival of the organization. One

leadership style that is very popular today is

transformational leadership. According to Kinicki

and Kreitner (2008) the transformational leadership

model generates significant organizational changes

because this form of leadership emphasizes a higher

level of intrinsic motivation, trust, commitment and

loyalty from subordinates.

For Bateman and Snell (2015) in

transformational leadership, leaders who motivate

people to transcend their personal interests for the

good of the group. The same was stated by

Ivancevich et. al (2014) that transformational leaders

are able to influence others by using charisma,

paying attention, to followers, and stimulating

others. Transformational leaders are able to

influence others by using charisma, paying attention

to followers, and stimulating others.

According to Bass, transformational leadership

can be interpreted as Transformational leadership

describing such leaders as change agents that are

elicit and transform followers ’beliefs, attitudes and

motivations. These leaders provide vision and

develop emotional relationships with their followers,

increase the latter's consciousness and higher goals,

above their own interests (Cavazotte, Flávia.,

Moreno, Valter., And Bernardo, Jane., 2013). Bass

further explained in different literature that

transformational leadership is transformational

leadership emphasizes charisma, individualized

consideration, and intellectual stimulation

(Champoux, Joseph E., 2011).

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

882

Organizational culture

Culture consists of unwritten rules and represents the

emotional side of the organization. Everyone who

participates in culture but culture generally

processes are not realized by everyone.

Organizations are aware of culture when they try to

implement new and different strategies or programs

that are contrary to fundamental cultural norms and

values. According to Daft, and Schneider that

organizational culture provides cohesiveness and

coherence inside the organization and resembles it to

"glue" which brings and holds people together. This

understanding implies that organizational culture

provides coherence and coherence within the

organization and equates it with the "glue" that

brings and unites people (Zeyada, Mustafa., 2018).

Luthan (2011) defines organizational culture as

Who is probably most closely associated with the

study of organizational culture, defining it as a basis

for assumptions that are discovered, discovered, and

developed by a group of people. adaptation and

internal integration that has worked well enough to

be considered valuable and therefore to be taught to

new members as well as to perceive, think and feel

in relation to those problems.

Schein as quoted by McShane and Von Glinow

(2015) states that organizational culture consists of

three main elements. First, artifacts, which consist of

stories / legends, rituals / ceremonies, organizational

language, and physical structure. Second, shared

values, including realized trust and evaluation of

what is good and bad, right or wrong. Third, shared

assumptions, consisting of unconsciousness (pre-

existing perceptions or beliefs), and ideal mental

models. This means that the organizational culture

must at least include artifacts, shared values, and

shared assumptions. From this it appears that

organizational culture is very thick element of

togetherness.

Innovation

According to Ireland, Hoskisson and Hitt (2011),

innovation is the process of creating a commercial

product from invention. On the other hand Montalvo

argues that innovation is a well-recognised

determinant of growth in firms, regions and in the

economy as a whole, although explaining why (and

how) firms innovate remains a challenge for

academics and practitioners alike (Lenihan, Helena.,

and McGuirk, Helen, 2014).

According to Kreitner and Knicky that

Innovation creation of new things that are used by

consumers. Innovation is to create new things based

on desire users. So it also according to scemerhorn.

"Innovation is the process of creating new ideas and

putting them into practice. Schermerhorn (2010) also

said, "innovation is the process of taking a new idea

and putting it into practice." Innovation is the

process of taking new ideas and putting them into

practice. . Along with this, Certo and Certo (2009)

stated that "innovation is the process of applying

new ideas for improvement of organizational

processes, products, or services."

In addition, Ahmed and Shepherd (2010) say,

innovation is a source of advancement and

development. Further explained, innovation as

creation (invention): the focus is on resources

(people, time and money) to invent or develop a new

product, service, new way of doing things, a new

way of thinking about things. While Schumpeter

defines innovation as innovation is described as the

engine of growth and carrying out new combinations

of productive means. "creative destruction. While

Roper et al., mentions while firms rely on diverse

sources of knowledge including horizontal,

backward, forward and in-house linkages for

innovation (Lenihan and McGuirk, 2014).

Then Robbins and Coulter (2016) signal creative

innovation ideas and turning them into useful

products or work methods. This understanding can

be interpreted that innovation takes creative ideas

and turns them into useful products or new work

methods.

Conceptual Framework

The research framework can be described in Figure

1, as follows:

Figure 1: Conceptual Framework

The research hypothesis are :

1. Transformational leadership influences

performance.

2. Organizational culture influences performance.

3. Innovation affects performance.

4. Transformational leadership influences

innovation.

5. Organizational culture influences innovation.

6. Transformational leadership influences

organizational culture.

Employee Performance Model: Analysis of Transformational Leadership, Organizational Culture, and Innovation - Survey at Directorate

General of Customs and Excise of Indonesia - East Java 1 Regional Ofﬁce

883

3 RESEARCH METHOD

The unit of analysis of this study was employees of

the East Java Customs Office I, with a sample of 177

respondents. The research approach used in this

study is a quantitative approach using Path Analysis.

This analysis is a development of the regression

equation, which is one option in order to study the

dependence of a number of variables in the model.

This analysis is a good method to explain if there is

a large set of data to analyze and look for a causal

relationship. Path analysis is one of the analytical

tools developed by (Dillon and Goldstein in Ali, H

and Limakrisna, N, 2013). Wright developed a

method to find out the direct and indirect effects of a

variable, where there are variables that exogenous

variables and endogenous variables.

The path diagram above consists of three sub-

structures with three equations, where X1 and X2

are exogenous variables (exogenous) which are

variables that have no explicit cause, this variable

functions as an independent variable / cause for the

following sequence variables Y and Z as

endogenous variables (endogenous). Before the

analysis, a questionnaire instrument test was carried

out with validity and reliability testing, and a

requirement test was carried out through normality

and linearity tests.

4 ANALYSIS

Before stepping into testing hypotheses, it must first

go through calculation analysis requirements.

Testing the analysis requirements used consisted of

two types, namely the normality test, and the

linearity test.

From the results of the Liliefors, it shows that there

is no Lcount value greater than Ltable, so it can be

concluded that the estimated error originates from a

population that is normally distributed. While the

test of regression significance and linearity shows

that the F-count value is greater than Ftable, so it can

be concluded that all regression equations are linear.

To answer the objectives in this study, the main

structure in the research model was broken down

into three sub-structures, as follows :

1). Y = 0,241.X1 + 0,318.X2 + 0,366.X3 + 0,31.

2). X3 = 0,367.X1 + 0,447.X2 + 0,43.

3). X2 = 0,715.X1 + 0,49.

Where to answer goals 1, 2, and 3 with the first sub-

structure, to answer the objectives 4 and 5 by using

the second sub-structure, and to answer goal 6 using

the third sub-structure.

The value of cooficient of determination (R2)

shows 0,69. This means that transformational

leadership, organizational culture and innovation

contribute to performance as big as 69%. Based on

the results of the analysis of determination there are

still many factors that influence performance, such

as the researchs had been conducted by Aima, H., &

Ali, H. (2017), Ansori, A., & Ali, H. (2017),

Riyanto, S., Sutrisno, A., & Ali, H (2017) and Ali H.

& Syailendra, Y. (2013), therefore further research

is needed.

The following is the SPSS output of the three

structures summarized in the following table.

Table 1: SPSS Output Three Sub Structures

Model

Unstandardized

Coefficients

Beta t Sig.

BStd.Error

–

Y .334 .090 .241 3.701 .000

–

Y .352 .074 .318 4.722 .000

–

Y .338 .060 .366 5.653 .000

–

X3 .549 .106 .367 5.154 .000

–

X3 .535 .085 .447 6.277 .000

–

X2 .894 .066 .715 13.529 .000

Path Analysis Results

The output results above are included in the

structural equation image as follows:

Figure 2: Hypothetic Model along with Path

Coefficient Value

The results of the influence analysis between

variables are as follows:

1. Effect of Transformational Leadership (X1)

on Performance (Y).

Based on the calculation results obtained the path

coefficient of the direct effect of transformational

leadership (X1) on performance (Y) is P41 = 0.241.

The path coefficient value shows that the direct

effect of transformational leadership (X1) on

performance (Y) is 0.241. The path coefficients

obtained are positive, so that the effect is directly

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

884

proportional, meaning that the higher or better the

level of transformational leadership will improve

performance. The value of tcount obtained is 3.701,

while the value of ttable for dk = 177 at  = 0.05 is

1.653. tcount > ttable, then Ho is rejected and H1 is

accepted. This means that transformational

leadership has a positive and significant direct effect

on performance.

2. Effect of Organizational Culture (X2) on

Performance (Y).

From the calculation shows the path coefficient of

the influence of organizational culture (X2) on

performance (Y) is P42 = 0.318. The path

coefficient value shows that the direct effect of the

variable organizational culture (X2) on performance

(Y) is 0.318. Positive path coefficients prove that

improving organizational culture will lead to

improved performance. While the value of tcount

obtained is 4.722, and the value of ttable for dk =

177 at  = 0.05 is 1.653. tcount > ttable which

means Ho is rejected and H1 is accepted. This

means that organizational culture has a positive and

significant direct effect on performance.

3. Effect of Innovation (X3) on Performance (Y)

Based on the calculation of the path coefficient for

the direct effect of innovation on performance (P43)

coefficient = 0.366. The path coefficient value

shows that the direct effect of the innovation

variable (X3) on performance (Y) is 0.366. The

obtained path coefficient is positive, which shows

the understanding that increasing innovation will be

followed by increased performance. The tcount

obtained is 5.653 and the t-value for dk = 177 at  =

0.05 is 1.653. The tcount > ttable carries the

meaning that Ho is rejected and H1 is accepted. This

means that innovation has a positive and significant

direct effect on performance.

4. Effect of Transformational Leadership (X1)

on Innovation (X3).

Calculation of the path coefficient for the direct

effect of transformational leadership (X1) on

innovation (X3) is P31 coefficient = 0.367. The path

coefficient value shows that the direct effect of

transformational leadership (X1) on innovation (X3)

is 0.367. The path coefficient obtained is positive,

which shows the understanding that increasing

transformational leadership will be followed by

increased innovation. While the tcount obtained is

5.154 and the t-value for dk = 177 at  = 0.05 is

1.653.

5. Effect of Organizational Culture (X2) on

Innovation (X3).

Based on the calculation of the path coefficient

shows the path coefficient direct effect of

organizational culture on innovation (P32) = 0.447.

The path coefficient value shows that the direct

effect of the variable organizational culture (X2) on

innovation (X3) is 0.447. The path coefficient

obtained is positive, which means that the increase

in organizational culture will be followed by an

increase in innovation. While the value of tcount

obtained is 6.277, and the value of t¬ for dk = 177 at

 = 0.05 is 1.653. tcount > ttable, so H0 is rejected

and H1 is accepted. This implies that organizational

culture has a positive and significant direct effect on

innovation.

6. Effect of Transformational Leadership on

Organizational Culture

Based on the calculation of the path coefficient of

the influence of transformational leadership on

organizational culture (P21) the value = 0.715 was

obtained. The path coefficient value shows that the

direct effect of transformational leadership (X1) on

organizational culture (X2) is 0.715. The path

coefficient is positive which means that the

improvement of transformational leadership will

have an impact on improving organizational culture.

The tcount obtained is 13,529, and the t-value for dk

= 177 at 177 = 0.05 is 1,653. tcount > ttable which

means Ho is rejected and H1 is accepted. This

implies that transformational leadership has a

positive and significant direct effect on

organizational culture.

5 DISCUSSION

From the results of the interpretation of the data

above, it can be discussed that:

1. Effect of Transformational Leadership on

Performance

The results of this study indicate that

transformational leadership has a positive and

significant direct effect on performance. This finding

is understandable because in the dynamics of

organizational life, including government

organizations, transformational leadership has an

important and vital role in encouraging employee

performance improvement, including goods

inspection staff at the Kantor Wilayah Direktorat

Jenderal Bea dan Cukai Jawa Timur I. Research

results of Gooty et al (2009 ) and Biswas (2012) also

Employee Performance Model: Analysis of Transformational Leadership, Organizational Culture, and Innovation - Survey at Directorate

General of Customs and Excise of Indonesia - East Java 1 Regional Ofﬁce

885

show that transformational leadership has a positive

effect on performance. This means that the results of

this study support and confirm the results of

previous studies that transformational leadership has

a positive effect on performance with the location

and object of research on goods inspectors in

government organizations, especially the Kantor

Wilayah Direktorat Jenderal Bea dan Cukai Jawa

Timur I.

2. Effect of Organizational Culture on

Performance

The results of this study have shown that

organizational culture has a positive and significant

direct effect on performance. This emphasizes the

meaning that organizational culture has a vital role

for the advancement of organizational members

(employees) and organizations, including

government organizations, especially the Kantor

Wilayah Bea Cukai Jawa Timur I. The results of

this study show the same results as the research

conducted by Nikpour (2017 ) which shows that

organizational culture influences performance, with

research settings on employees examining

government organizations, especially the Kantor

Wilayah Bea Cukai Jawa Timur I. However,

compared to these previous studies, the results of

this study have differences in the scope of

performance variables. In the Nikpour study the

scope is an organization, while in this study the

scope is individual. In this research perspective,

individual performance is predisposed to

organizational performance, as constrained by

Gibson et al (2009) that individual performance is

the basis of organizational performance.

3. Effect of Innovation on Performance

The results of this study also show that innovation

has a positive and significant direct effect on

performance. This finding is easy to understand,

because innovation has now become a necessity and

has become part of modern organizations, including

government organizations, especially the Kantor

Wilayah Direktorat Jenderal Bea dan Cukai Jawa

Timur I. The results of research by Marques and

Ferreira (2009), and Omri (2015), provide support

for this research. And the research of Tantayanubutr

and Panjakajornsak (2017) also shows that

innovation influences business performance. This

means that the results of this study support and

confirm the results of previous studies that

innovation has a positive effect on performance with

research settings on employees examining

government organizations, especially the Kantor

Wilayah Direktorat Jenderal Bea dan Cukai Jawa

Timur I.

4. Effect of Transformational Leadership on

Innovation.

The results of this study also show that

transformational leadership influences innovation.

This finding is also understandable.

Transformational leadership is a person's ability to

influence, motivate, manage activities and

interactions between individuals, and enable others

to build a vision and confidence so that they can

contribute to the achievement of organizational

goals, through the influence of idealism,

inspirational motivation, intellectual stimuli, and

individual considerations. The results of Park's

research, Moon and Hyun (2014) and Nusair,

Ababneh, and Bae (2012) also show that leadership

influences innovative behavior. This means that the

results of this study support and confirm the results

of previous studies that transformational leadership

has a positive effect on employee innovation with

research settings on employees examining

government organizations, especially the Direktorat

Jenderal Bea dan Cukai.

5. Effect of Organizational Culture on

Innovation

The results of this study also show that

organizational culture has a positive and significant

direct effect on innovation. This finding shows the

vitality of organizational culture for employee

innovations, including employees of auditors at the

Kantor Wilayah Direktorat Jenderal Bea dan Cukai

Jawa Timur I. Results of research by Nham, Pham,

and Nguyen (2014), Yeşil and Kaya (2012), and

Daher (2016) also prove that the organizational

culture is related to innovation. This means that the

results of this study support and confirm the results

of previous studies that organizational culture has a

positive effect on innovation with research settings

on employees examining government organizations,

especially the Direktorat Jenderal Bea dan Cukai.

6. Effect of Transformational Leadership on

Organizational Culture

The results of this study also show that

transformational leadership has a positive and

significant effect on the culture of organization. This

condition confirms the meaning that

transformational leadership is not only important for

improving employee performance and innovation,

but also vital for building organizational culture. The

results of Aydogdu and Asikgil (2011) and Al-

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

886

Sardieh (2012) research also prove that

transformational leadership has an influence on

organizational culture. Thus, the results of this study

support and confirm the results of previous studies

that transformational leadership has a positive effect

on organizational culture with research settings on

employees examining government organizations,

especially the Direktorat Jenderal Bea dan Cukai.

6 CONCLUSIONS

Based on the results and discussion, the conclusions

of this study are:

1. Transformational leadership has a positive and

significant direct effect on performance. This

finding shows that the improvement of

transformational leadership at the leadership

level in the work area of the Kantor Wilayah

Bea Cukai Jawa Timur I, can improve the

performance of goods inspection staff in the

Kantor Wilayah Bea Cukai Jawa Timur I.

2. Organizational culture has a positive and

significant direct effect on performance. This

finding shows that the improvement of

organizational culture in the work environment

at the Kantor Wilayah Bea Cukai Jawa Timur I

can improve the performance of goods

inspection staff in the Kantor Wilayah Bea

Cukai Jawa Timur I.

3. Innovation has a positive and significant direct

effect on performance. This finding shows that

improvements in innovation in the work

environment of the Kantor Wilayah Bea Cukai

Jawa Timur I can improve the performance of

goods inspectors at the Kantor Wilayah Bea

Cukai Jawa Timur I.

4. Transformational leadership has a positive and

very significant direct effect on innovation. This

finding shows that the improvement of

transformational leadership at the leadership

level in the work area of the Kantor Wilayah

Bea Cukai Jawa Timur I can increase the

innovation of goods inspectors at the Regional

Office of the Directorate General of Customs

and Excise at the Kantor Wilayah Bea Cukai

Jawa Timur I.

5. Organizational culture has a positive and very

significant direct effect on innovation. This

finding shows that the improvement of

organizational culture in the Kantor Wilayah

Bea Cukai Jawa Timur I can increase the

innovation of goods inspectors in the Kantor

Wilayah Bea Cukai Jawa Timur I.

6. Transformational leadership has a positive and

very significant direct effect on organizational

culture. This finding shows that the

improvement of transformational leadership at

the leadership level in the working area of the

Kantor Wilayah Bea Cukai Jawa Timur I can

create organizational culture conducivity in the

Kantor Wilayah Bea Cukai Jawa Timur I.

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Employee Performance Model: Analysis of Transformational Leadership, Organizational Culture, and Innovation - Survey at Directorate

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