The Effect of Transformational Leadership and Knowledge Management on Intellectual Capital and Its Implication on the Performance of State Owned Bank Branch Offices in West Java

Abstract

The performance of state-owned banks from the aspect of profitability and efficiency is not too bad as indicated by the high ratio average of NIM and ROA and fairly low BOPO. However the low enough BOPO should be alerted because the cost of third-party funds as well as the relatively high operating expenses offset by higher lending rates. Indonesian Banking mainly state-owned banks should improve as it will face the competitive market in which our banks will compete with the big banks, especially banks of Singapore and Malaysia in the ASEAN Economy Community (AEC) by 2020. One of the policies to improve the functioning of global-oriented intermediation is giving high flexibility to the branch office. Potential bank branches can be explored through the enhancement of intellectual capital variables. This increase can be caused by an increase in transformational leadership and knowledge management variables. Intellectual capital is measured through the dimensions of human capital, structural capital and relationship capital. Transformational leadership dimensions are measured through idealized influence, inspirational motivation, intellectual stimulation, and individual consideration. Knowledge management dimensions are measured through socialization, externalization, combination, and internalization. The nature of paper is finalizing the concept before empirical tests and performed with the scope of intensive study at the branch office managers of state-owned banks and theoretically can be concluded that the strengthening of transformational leadership and knowledge management at branch offices to improve intellectual capital is the key in improving the performance of state-owned bank branch offices in West Java.

DOI: 10.5901/mjss.2015.v6n5s5p97