Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)

Abstract

Effect of Corporate Governance and Risk Management against Corporate Sustainability at the Coal Mining Industry in Indonesia

Author(s): Arief Senjaya, Ernie Tisnawati Sule, Nury Effendi, Martha Fani Cahyandito

Mining of natural wealth in Indonesia is still an interesting belle to be discussed, especially coal mining. Coal mining in Indonesia not only has a positive economic impact but also causes various environmental and social problems. Indicators of success of a mining company are not only assessed from economic indicators but also include environmental and social indicators. The principle of sustainability is a key requirement in measuring the success and effectiveness of development in accordance with the agreement set forth in the Brundtland Report, 1987, which has been adopted by the Government of Indonesia in its constitution. This study aims to determine the effect of corporate governance and the use of risk management on business sustainability in the coal mining industry in Indonesia. Some literature has examined this relationship a lot, but until now no one has specifically examined this relationship in coal mining in Indonesia. This research uses the Structural Equation Modeling (SEM) - PLS method in 50 companies. The results showed that: (1) corporate governance has an effect on risk management (2) risk management has an effect on corporate sustainability (3) corporate governance has an effect on corporate sustainability.