Prof. Wihana Kirana Jaya, M.Soc.Sc, Ph.

D
Faculty of Economics and Business
Universitas Gadjah Mada

June 2012
Literature
Discussion

Research
Methodology

Conclusion
 New Economic History
(North, Fogel, Rutherford)

Public Choice & Political Economy

(Buchanan, Tullock, Olson, Bates)

(Social Capital)
New Social Economics (Putnam, Coleman)
(Becker)
NIE
Property rights literature
Transaction Costs Economics (Alchian, Demsetz)
(Coase, North, Williamson)
Economics of information
(Akerlof, Stigler, Stiglitz)
Theory of Collective Action
(Ostrom, Olson, Hardin)

Law and Economics

(Posner)
3
 Williamson Institutions
Embedded ness:
Social theory (L1) informal institutions, customs,
Tradition, norms religion

Economics of
Property rights/ Institutional environment:
Positive political Formal rules of the game-esp. property
Theory (L2) (polity, judiciary, bureaucracy)

Transaction cost Governance:

Economics (L3) Play of the game-esp.
contract (aligning governance
Structures with transactions)

Neoclassical
Economics/ Resource allocation and employment
Agency theory (L4) (prices and quantities; incentive alignment)
 THE ROLE OF INSTITUTIONs IN LOCAL ECONOMIC WELFARE
Level 1: Informal
Embeddedness institutions:
customs,
traditions, norms
& religion
Level 2: Formal rules: esp.
property rights
Rule of the Institutional
Environment
Games Reduce
uncertainty
Business firms,
Level 3: contract system,
Governance public
structures bureaucracies,
nonprofit
INSTITUTION organization
Level 4: P & Q; incentive
Resource alignment (agency
Reduce
Allocations & theory)
Employment Transaction
Cost
Organization
(Players)
Enhance:
1. Macro level:
Efficiency, productivity,
investment, and economic
LOCAL ECONOMIC WELFARE growth
2. Micro level:
Efficiency, productivity,
profitability, and sustainability 5
Pemerintah, Lembaga, dan Hasil Pembangunan Ekonomi

Hukum Informal Hukum Formal

dan Norma

Negara (Legislatif,
Faktor Budaya Struktur Lembaga Eksekutif, dan
Yudikatif)

Perilaku
Organisasi
Pemerintah

Struktur Insentif Biaya Transaksi Teknologi

Kontrak

Sumber: Bank Dunia, 1997

Hasil dalam
Ekonomi
 Many scholars argue that there are several types of
research methodologies such as positivist,
phenomenological and mixed paradigms (Creswell,
2003; Hussey and Hussey, 1997; Newman and Benz,
1998). Hussey and Hussey (1997: 77-78)

Positivistic paradigm is a
Phenomenological paradigm is a paradigm based on the natural
paradigm which assumes that social sciences which assumes that
reality is in our minds; a reaction to social reality is independent of us
the positivistic paradigm. and exists regardless of whether
we are aware of it.
Creswell (2003) and Jick (1979)
Mixed Paradigm has the capacity to yield holistic
explanations of complex phenomenon and it does
this by employing both quantitative and qualitative
procedures at the stage of data collection and also
at the time of data analysis
 Table 1: Mixed Methods Approaches

Dimensions Mixed Methods Approaches

- Philosophical assumptions - Pragmatic knowledge claims

- Strategies of inquiry - Sequential, concurrent, and transformative
- Methods - Both open- and closed-ended questions, both
emerging and predetermined approaches, and both
quantitative and qualitative data and analysis
- Practices of research, as the - Collects both quantitative and qualitative data.
researcher - Develops a rationale for mixing
- Integrates the data at the different stages of inquiry
- Presents visual pictures of the procedures in the
study
- Employs the practices of both qualitative and
quantitative research
Sources: A Simplified Version of Creswells Table 1.4 (2003: 19)
 Denzin (1970: 602) triangulation: using a mixture
of methodologies for research method.
Hussey and Hussey (1997: 74) triangulation: the
use of different research approaches, methods and
techniques in the same study.
Easterby et al. (1991) four types of triangulation:
Data triangulation
Investigator triangulation
Methodological triangulation
The triangulation of theories
Fiscal decentralisation reform in Indonesia has been
an exceedingly complex phenomenon.
The methodology of triangulation helps to overcome
the potential bias and sterility of a single-methods
approach.
 The paper follows the recommendations of using
a mixed methodology.
The paper utilises three interrelated approaches:
First, it will include a review of the secondary literature.
Second, the paper will involve examining regional
autonomy from the perspective of formal institutional
structures.
Third, and most critically, it will utilise three regional
case studies.
The paper looks at the informal institutions in
addition to the formal ones.
Analysis of developments is at the level of the
Indonesian kabupaten.
 Yin (2003):
. the essence of a case study, Substantial study of the
the central tendency among all
new decentralisation laws
types of case study, is that it tries
of 1999 and 2004 in
to illuminate a decision or set of
Indonesia engages in an
decisions: why they were taken,
in-depth analysis of
developments at the
how they were implemented, and
kabupaten level.
with what result.
The present paper seeks
Eisenhardt (1989) and Yin (1994)
to make a unique
contribution to the
comprehensive data collection discussions about the
from documents, interviews, decentralisation process
personal field observations and that began in 1999 and
examination of alternative 2004.
explanatory hypotheses or
interpretations

The Case Studies

 Hussey (1997) and Yin (2003)
the unit of analysis needs to be
related to the way in which the
research questions have been
defined
The relevant units of
analysis were the
individual decision
makers at the kabupaten
levels.
The data were collected
in the form of interviews
and questionnaires.
Unit of Analysis
Selecting particular
kabupaten .
Using purposive or
judgmental sampling
approach.
Considering constraints
of time and space.
Gay and Diehl (1996)
requires the researcher to apply
his own expert knowledge and
judgement to the selection of a
sample for study
Selection Criteria
 Hussey and Hussey, 1997
Data can be defined as known
facts used as a basis for inference
or reckoning.
The primary data will
be collected during six
months of fieldwork in
the three kabupatens.
The secondary data
included published
materials.
Data Sources
Collecting Quantitative
Data through
Questionnaires
The Research Sample
In-depth Face-to-Face
Interviews (Qualitative
Data)
Participant vs Non-
Participant Observation
The Documentary
Evidence
 Collecting Quantitative Data
through Questionnaires
Primary data:
distributing questionnaires
conducting direct interviews
making direct observations
To explore the effects of fiscal
decentralisation by studying
the perceptions of change
amongst various kabupaten
decision makers, functionaries
and community members.
Three groups of respondents
were identified:
Group 1: How have the
institutional changes in the
context of regional autonomy
affected the exercise of fiscal
power at the kabupaten level?
(kabupaten government
bureaucrats and DPRD)
Group 2: How have the kabupaten
elites responded to the
institutional changes in the
context of the new regional
autonomy? (Revenue and
Expenditure Committees of the
kabupaten government
bureaucrats, or they were DPRD or
the belonged to the kabupaten
communities including
universities, NGOs, and business
communities)
Group 3: How have institutional
changes since 1999 impacted on
businesspersons at the kabupaten
level? (kabupaten business
communities)
Perceptions:
Pessimistic: the reform process
has many difficulties.
Positive: the reform process is
going well.
 The Research Sample
The participants in the
survey were selected using
a purposive sampling
technique.
A large number of
informants represents:
the upper-middle-ranking
kabupaten bureaucrats
members of DPRD
members of kabupaten
communities (NGOs,
kabupaten university scholars
and kabupaten business
communities)
In-depth Face-to-Face
Interviews (Qualitative Data)
The participants were
selected using a purposive
sampling technique.
Interview methods: notes
and audio-tape recordings
Face-to-face interviews
open-ended
questionnaires to collect
qualitative data
Deep insight to fill the
gaps in the quantitative via
the questionnaires
Crosscheck MoF,
Directorate of Fiscal
Balance, and Ministry of
Home Affairs (MoHA)
Table 3: Details of the Respondents Who Consented to be Interviewed
Administrative
Bureaucrats DPRD Communities
Levels
National Levels - The Director of Fiscal
(Informal Interview) Balance, MoF,

- The Sub-director of
regional finance, MoHA
Total Number 2
District Levels (Formal
Interview)
Sleman - Bupati - Head of - University
- Kabupaten Secretary Kabupaten scholars
- Vice head of budget DPRD - NGO
section - Asita
- Senior staff of government - Gapenda
budget section - REI
Total 4 1 5
Badung - Heads of financial section - Head of - University
- Vice head of financial DPRD scholars
section budget - Asita
- Vice head of revenue committee - REI
section - Gapenda
- PHRI
Total 3 1 5
Kupang - Head of financial section - Head of - University
- Vice head of revenue DPRD scholars
section budget - NGO
Vice head of financial section committee - Gapenda
Total 3 1 3
Total in all three 12 3 13
Kabupatens
Source: Survey Data
 Participant vs Non-
Participant Observation
Hussey and Hussey, 1997
Non-participant observation is
characterised by the lack of
researcher involvement in what he
or she observes.
Participant observation, on the
other hand, is marked by active
involvement by the researcher in
the setting observed.
Non-participant
observation direct
observations formal and
informal meetings (fiscal
decentralisation seminars at
the regional and national
levels)
The Documentary Evidence
Published statistics, annual
reports, internal and other
records:
the central government annual
financial reports, research reports
and regional autonomy
evaluations from the central
government including the MoF,
MoHA and the Central Bureau of
Statistics (CBS)
provincial governments and
kabupaten governments (DPRD
and kabupaten communities)
Kabupaten budget reports,
evidence pertaining to
development-planning, and
documents containing kabupaten
statistics
Verifying data
questionnaires, interviews and
observations.
To analyse in depth the formal
regional autonomy and fiscal
decentralisation laws
introduced in 1999 and 2004.
 Creswell (2003)
Data analysis can combine
quantitative (descriptive and
inferential numeric analysis) and
qualitative analysis (description
and thematic text or image
analysis).

This is the most Qualitative Data

appropriate method to
employ in this paper Analysis
given that the data itself Quantitative Data
is both quantitative and Analysis
qualitative.

Data Analysis
 Qualitative Data Quantitative Data
Analysis Analysis
Problems in analysing Problems in analysing
qualitative data: quantitative data:
the data is difficult to be small sample sizes
summarised and structured Likert scale was the basis
to more general of the kabupaten level
conclusions. data.
This paper collected The best method for a
data from interview quantitative analysis in
and survey. this paper:
Trends is identified in the statistical mean
the quantitative standard deviation
The quantitative data were
information.
analysed using Statistical
Package for the Social
Sciences (SPSS) software.
 This paper is the first research of its kind to provide a
comprehensive investigation of the impact of
institutional change in the context of Indonesias
regional autonomy reform.
Triangulation methods of field research involved
direct interviews, survey and documentation.
The interviews employed semi-structured method
using topic guides and focused on the research
questions.
Examining the nature of Indonesias fiscal system and
central-regional relations both before and after the
new laws of 1999 and 2004 from the perspective of
formal structures.
To what extent do these new laws represent a
genuine decentralisation of fiscal powers?