SUPPORTING FACTORS FOR THE SUCCESSFUL IMPLEMENTATION OF CORPORATE GOVERNANCE IN HANDICRAFT SMES

Purpose of Study: This research is to analysis and study factors that influence the successful implementation of good corporate governance in handicraft SMEs based on several factors related to business ethics, public information, and the company's ability to develop, be sustainable and compete. This study also aims to create a new element from several groups of factors that can be categorized based on grouping in a component matrix. Methodology: This research was conducted using a descriptive correlational design. The samples were 54 handicraft SMEs that have implemented corporate governance principles in five regencies in West Governance. The sampling technique uses simple random sampling in 5 districts in West Java Province. Data processing used Exploratory Factor Analysis (EFA). Main Findings: The results show that the four factors support the successful implementation of Handicraft SME's corporate governance. The first factor is profitability, financial report integrity, and competitiveness, this primary factor is called competitiveness. The second factor is decision making, business ethics, and planning and organizing aspects, and this factor is called leadership. The third factor is sustainability and access to banking and this factor is called the bankable factor. The fourth factor consists of growth and public information, and these factors are called growth factors. Applications of this study: The results of this study can be used as a reference by handicraft SMEs to develop business management to improve leadership factors and maintain growth so that it becomes bankable and competitive. This information is also useful for investors and financial service providers to provide capital to handicraft SMEs. Novelty / Originality of this study: First, this research formed a new factor that supports the success of governance in handicraft SMEs; these factors are leadership, competitiveness, bankable, and growth. These four factors are the main factors determining the successful implementation of corporate governance in handicraft SMEs. Both of these studies combine several concepts from previous research the characteristics of SMEs in West Java, Indonesia.


INTRODUCTION
The implementation of good corporate governance can help SMEs get alternative funding from investors and financial institutions (Gü & Apak, 2014). Corporate governance deals with the management of relationships among different parties in a company, both formal and informal. The purpose is to effectively maintain a balance between the interests of different parties in a company (Lashgari, 2004;MudashiruI & Bakare, 2014;Narwal & Jindal, 2015). The adoption of good corporate governance in a company was found to improve operational transparency, ensure accountability, and improve profitability. This also helps protect the interests of shareholders by aligning their interests with those of the managers. Generally, cooperate governance was found to have positive impacts on organizational performance (MudashiruI & Bakare, 2014; Narwal & Jindal, 2015).
Small and medium-sized enterprises (SMEs) play a considerable role in the national economy. Their contribution to GDP reached 60.34 percent. This shows how good their performance is (Hamdani & Susilawati, 2018;Hamdani, 2018). Some studies show that corporate governance was not well-implemented in SMEs in Indonesia. They were too focused on profit rather than the implementation of good governance principles (Ilyas & Rafiq, 2012). There are two conflicting views on the implementation of corporate governance principles in SMEs (Abor & Adjasi, 2007). The first view sees no urgency in implementing good corporate governance because there is no agency in SMEs. There is no such thing as an owner-management mechanism usually found in big companies (Hanifah, 2015). On the other hand, there have been many pieces of evidence of the successful implementation of corporate governance in SMEs in developed countries (OECD, 2018). SMEs can learn from how big companies implement the principles of an effective governance system (Jaswadi, 2017).
SMEs are frequently constrained by capital limitation, owner's limited education, poor competitiveness, poor management, financial access difficulties, and so on (Suyono, 2018). Several studies have shown that the implementation of corporate governance can make a company perform better. Research on the implementation of corporate governance in the country of Malaysia supervised by the role of the Malaysian Company Commission, which ha to the duty to ensure compliance with corporate governance standards in Malaysian state-owned SMEs. (Umrani, Johl, & Ibrahim, 2015). SMEs in African countries have implemented corporate governance so they can easily get financial access (Lekhanya, 2015).
World Bank defines good governance as a solid and responsible management that is in line with the principles of democracy and an efficient market, avoidance of misallocation of investment funds and prevention of corruption both politically and administratively to carry out budgetary discipline and create legal and political frameworks for business activities (Iskander & Chamlou, 2000;Umrani et al., 2015). Corporate governance is a system consisting of a set of structures, procedures, and mechanisms designed for the management of a company based on the principles of accountability to improve the company value in the long run (Velnampy, 2014). The corporate governance system is used by the management to direct and monitor business activities. Therefore, good corporate governance can improve company profitability and value (Umrani et al., 2015). According to the Indonesian Institute for Corporate Governance (IICG), good corporate governance is encouraged by (1) rapid changes in the environment that lead to changes in global market competency and (2) the complexity of ownership structure that influences the management of stakeholders (Sunarto, 2010).
The key to successful SME management and the implementation of its strategy is to design a performance management system that enables leaders in the company to monitor the implementation of the GCG framework optimally (Yacuzzi, 2005). Corporate social responsibility, risk management, transparency, internal control, and internal audit are things SMEs take into account to deal with competition (Ateba, Ohei, Maredza, Deka, & Schutte, 2015). The strengthening of SMEs implies strengthening the country's economy because SMEs occupy more than 90% of businesses in Indonesia (Suyono, 2018).
Some factors that encourage the implementation of corporate governance include the desire for transparency, business ethics, disclosure of SME information to the public, better management system, strong internal audit, opportunities to grow (Afande, 2015). Studies have shown that there is a positive correlation between the implementation of corporate governance and SME profitability (Afande, 2015; MudashiruI & Bakare, 2014). Corporate governance should be urgently implemented in SMEs, especially to present credible and reliable financial statements to investors or banks (Amoako, Marfo, Gyabaah, & Gyamfi, 2014). Corporate governance is required for risk management, better decision making, better principle application and better financial statement (ASX, 2006).

RESEARCH METHOD
This research was conducted using a descriptive correlational design. The samples were 54 handicraft SMEs that have implemented corporate governance principles in five regencies in West Governance. Data were analyzed using Exploratory Factor Analysis (EFA) by means of SPSS 22. EFA was conducted to figure out a new concept and the latent variable. Table 1 presents the results of KMO and Bartlett's Test in SPSS. Using the significance level of 0.05, the suggested correlational coefficient was higher than 0.5. The MSA value was 0.584 and the significance was 0.000, meaning that further analysis process was feasible. transparency and internal audit were lower than 0.5, these variables were removed and data analysis was redone without them.  Table 2 shows that business ethics has the extraction value of 0.779, meaning that 77.9% of variance of this variable can be explained by the established factors, that planning and organizing aspect has the extraction value of 0.324, which means that 32.4% of variance of this variable can be explained by the established factors, and so forth.  Table 3 shows that there were four factors established out of 10 input variables, indicated by the eigenvalues higher than 1. The eigenvalues of Factors 1-4 were 3.086, 1.734, 1.094, and 1.026 respectively. The total variance was 69.4%. The figure shows the Scree Plot which shows the relationship between established factors in the form of a graphic.    Factor 1 consisted of the variables profitability, financial report integrity, and competitiveness. Factor 1 was then called competitiveness since profitability, finance, and competitiveness are business performance establishing factors. Business performance is said to be a driving factor in the implementation of corporate governance (Hamad, 2011). The implementation of corporate governance was found to improve business performance (

CONCLUSION
Four factors were encouraging the implementation of good corporate governance in handicraft SMEs in West Java. The reasons for the implementation of good corporate governance were to improve business performance, to prepare better business planning, to gain banking access, and to improve growth and to disclose information to the public. Based on this reasoning, it can be concluded that the four factors were business performance, management, accessibility, and credibility.