Exploring the Relationship between Social, Environmental, and Financial Performance of Indonesian State-Owned Enterprises: Evidence from Binary Log Regression Analysis

Abstract

This research investigates the interplay between social, environmental, and financial outcomes of Indonesian State-Owned Enterprises (SOEs) utilising binary logistic regression analysis. SOEs grapple with the challenge of reconciling profitability with their social and environmental responsibilities. The study scrutinises adherence to GRI standards, assessing financial performance through Return on Assets (ROA) and Return on Equity (ROE), while integrating slack resource and good management theories. Findings indicate a positive correlation between financial performance and social compliance as well as environmental responsiveness; conversely, a negative relationship is observed with environmental compliance and social initiatives, indicating a lack of synergy. The study elucidates the positive linkage of social and environmental factors to financial performance, aligning with good management theory, and offers valuable insights for SOE managers in emerging markets.