Dynamic Capabilities in Post-Restructuring Regional Water Utility Performance

Ady Setiawan

doi:10.59261/inkubis.v8i3.438

Authors

Ady Setiawan Universitas Teknologi Surabaya

DOI:

https://doi.org/10.59261/inkubis.v8i3.438

Keywords:

Administrative Customer Loyalty, Asset Optimization, Dynamic Capabilities, Regional Water Utilities, Restructuring

Abstract

Background: Public water utilities must maintain affordable and reliable services while managing financial constraints, aging infrastructure, and persistent non-revenue water following restructuring. These challenges are particularly important for regional water utilities operating as natural monopolies with simultaneous public-service and commercial mandates.

Objective: This study examines the associations among asset optimization, administrative customer loyalty, dynamic-capability proxies, and post-restructuring organizational performance.

Methods: A comparative longitudinal quantitative design combined exploratory structural equation modeling using partial least squares (SEM-PLS) with 108 branch-year records from 12 PDAM Jember service units observed during 2011–2019 and descriptive analysis of Perumda Tirta Moedal Semarang performance data for 2017–2024. Because the branch-year records represent repeated observations and the Semarang series lacks a preregistration baseline and comparison group, the findings are interpreted as structural associations and descriptive patterns rather than causal effects.

Results: In Jember, asset optimization was positively associated with administrative customer loyalty, dynamic-capability proxies, and organizational performance. The two indirect effects were significant, with a combined indirect effect of 0.582 and a combined variance accounted for (VAF) of 59.4%, indicating complementary partial mediation. In Semarang, long-term debt remained low and billing effectiveness exceeded 95%, while non-revenue water (NRW) remained between 28% and 38%. Springate values for 2017–2020 were researcher estimates, whereas the 2021–2024 values were based on available audited data.

Conclusion: The two cases provide a corroborative, but not statistically equivalent, pattern showing that financial recovery should be accompanied by workforce capability development, disciplined asset management, and monitored NRW reduction.

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