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ANALYSIS OF BUSINESS RESOURCE VARIABLES AFFECTING

INSURANCE SALES (A STUDY OF INSURANCE COMPANIES

LISTED ON THE IDX)

Business; Operation; Data Analytic; Resorce; Govermance; Control

INTRODUCTION

In this modern era, companies must be more creative and active in increasing the consumer

values of their company. The intended consumer value is the ability of a company's product or

service to provide solutions to consumer needs. The bigger the problems and solutions provided,

the higher the value of the product or service in the eyes of consumers. With the increasing level

industrial environment and some of them experience bankruptcy. Long before the pandemic, the

retail industry was already in an alarming position, because of the new comfort resulting from

the use of technology. Changes in public consumption were one of the reasons why many

companies in this industry closed their outlets. Meanwhile, the increasingly existing marketplace

Analysis of Business Resource Variables Affecting Insurance Sales (A Study of Insurance Companies Listed

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133 Return Management Studies, Economic and Business , Vol 2 (No 2), Feb 2023

or online commerce has caused the retail industry to experience a decline in growth and is even

on the verge of bankruptcy. The condition of the company when it is on the verge of bankruptcy

to the extent that it exceeds the safe value limit will cause a decrease in interest from investors,

will affect the market which includes stock prices and the level of stock returns of a company.

business resources. Business resourcess play important part in determining the company

performance and profitability. Analysing the correlation between resources in the companies,

now it becomes necessity. CEO must identify which resources is giving the highest influence to

the company sales, operation cost, company profitability. Before, accounting department use

financial ratio, accounting ratio to determine the relation between cost center or accounting

account. However, today company have to take into account the other process or methodology

that might easily identify trend, symptom, or even business sign to be used for decision making

process. This research will try to initiate a simple concept of business analytic and rationlize it

for decision making process.

This concept will be the basis for data analytics for the company's internal team to support

Company grow using its resources

The company always targets profit, but competition always puts pressure on the company.

According to Edith Penrose's theory of the growth of the firm (Penrose & Penrose,

2009)Companies always have to survive and continue to grow. A firm, according to Penrose, is

a grouping of (productive) human and physical resources. It is described as "an administrative

planning unit, the operations of which are related and are coordinated by policies which are

formed in light of their effect on the enterprise as a whole. However, business resources continue

According to Barney's resource-based view theory (Barney, 1991) the company is very

dependent on its business resources. According to the resource-based view (RBV), a company's

are known as dynamic capacities (Ambrosini, Bowman, & Collier, 2009). During pandemic situation

the company has to face a great shift of customer preference and requirement to go online. The

need to go to E platform has been in the vision of every company. However the pandemic drive

the shifted of this condition faster then the company prediction. Currently companies need

guidelines, decisions, guidance so that their resources are able to handle problems. The required

business resources must also follow business needs. Changes that are made must be carried out

precisely, quickly and according to the wishes of consumers or business strategy.

Analysis of Business Resource Variables Affecting Insurance Sales (A Study of Insurance Companies Listed

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134 Return Management Studies, Economic and Business , Vol 2 (No 2), Feb 2023

Data-based decision making

Current problems cannot be separated from data-based decision making. Data is critical,

therefore a way of assessing, guiding and managing operational data is needed. This is where

research is needed that captures the condition of the company through Resource Based Analysis.

An interesting challenge is if the product offered is related to a very wide variety such as

health, accident, building, labor insurance products which are very dependent on detailed

calculations and a long process. This insurance product relies heavily on the concept of risk and

uncertainty. In the following theories that analyze decision-making uncertainty is expected

utility, state-dependent utility, The endowment effect, status quo bias, the regret and

disappointment paradigm, and prospect theory. According to the expected utility theory (EU),

the demand for insurance is Choose between indeterminate losses that could have occurred if

you were uninsured and specific losses such as paying premiums Premium (Manning & Marquis,

1996).

Accordingly, Insurance demand reflects an individual's degree of risk aversion, The need

the prospects of benefits or losses, not the degree of uncertainty, according to prospect theory,

which challenges the premises of EU theory.

For every anticipated gain or loss, people assume an ideal degree of risk. The point at

which a person sees gains and losses may affect their decision, and gambles are assessed based

on how much they deviate from this ideal risk level (Kai-Ineman & Tversky, 1979). People give

various weights to the likelihood that an event will occur, according to the cumulative

prospective theory, which blends state-dependent utility and prospect theory.

For instance, Tversky and Kahneman (Kahneman, Knetsch, & Thaler, 1991) explain why

people buy lottery tickets by over-weighting minor possibilities. According to the endowment

effect, people's risk aversion toward anything novel influences their decision-making. People

disappointment in the event that the result differs from what they had anticipated (Bell, 1985)

(Bell 1982, 1986). People may therefore want to remain uninsured because they fear regretting

their choice or feeling let down if they do not receive a settlement from insurance.

Manning and Marquis (1996) tested the robustness of expected utility and prospect theory

using data from the RAND research and discovered that the outcomes were not significantly

impacted by either theory. The influence of other elements in the decision-making process will

not change the outcomes, even if risk aversion is not the primary driver of insurance purchase

(Manning & Marquis, 1996). The theory says nothing about the level of consumers Income and

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its impact on insurance choices from the company's data, sales research activities, operations,

and new product creation are developed. All data is time series data.

Internal System-Internal Control

Decision making becomes accurate with data. What is critical is how the internal system

As a result, both owners and managers have implemented a variety of internal-control

regimes to further guarantee the protection of assets and to further control for agency issues

(Fama & Jensen, 1983; Jensen & Meckling, 2019). The limited internal control strategy that heavily

focused on accounting control has since evolved in close connection with the auditing industry

(Lee, 1971); (Heier, Dugan, & Sayers, 2005): (Pfister, 2009, p. 16). A technique for guaranteeing that

an organization's goals in operational effectiveness and efficiency, accurate financial reporting,

and compliance with laws, rules, and policies will be met can be acknowledge as internal control

systems. Internal controls were considered by the independent accountant as a strategy to

enhance the efficacy and efficiency of the audit process.

A proper evaluation of the efficiency of controls that management had installed became a

regulations, audit standards, and procedures being a direct outcome of events in the business

environment. These incidents also served as the impetus for the Treadway Commission's

Committee of Sponsoring Organizations to create the internal control architecture that is now

generally recognized. Internal control is now a comprehensive process where non-financial goals

are also taken into account and controls are no longer limited to the accuracy of financial

reporting (Kinney Jr, 2000); (Maijoor, 2000);(Spira & Page, 2003, p. 648); (Power, 2007, p. 49).

According to Brown (1962), the importance of this internal check system grew alongside the

growth of audit objectives and procedures.

The separation of owners from managers, as well as the expansion in size and complexity

of enterprises, are largely to blame for the growing demand for internal control (Haun, 1955);

component of Enterprise Risk Management (ERM) strategies today (Coso, 2004); Sobel &

Reding, 2012). According to corporate objectives and plans, internal control is a step that comes

after entity-wide risk assessment processes (Power, 2007, p. 35).

Internal control systems are a set of corporate policies and procedures that guarantee all

transactions are handled correctly in order to prevent resource theft, waste, and misuse. Internal

control systems are a necessary element that aids management in upholding its legal and

corporate governance responsibilities. Although the technical approaches to risk are still plainly

crucial (Renn, 2008, p. 15), discussions of risk and internal control have developed to place more

Analysis of Business Resource Variables Affecting Insurance Sales (A Study of Insurance Companies Listed

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of an emphasis on organizational governance (Power, 2007, pp. 18–19); (Renn, 2008); also see

(Aebi, Sabato, & Schmid, 2012; Kaplan & Mikes, 2012; Mikes, 2011).

Internal control is defined as "the entire system of controls, financial and otherwise,

created by the management so as to foster the business of the venture, in an organized and

in place by the management to ensure that the enterprise's operation is conducted in an organized

and effective manner and to protect the assets and ensure the completeness and accuracy of the

records. Control actions make up the internal control component. They are the core control rules

and practices that can be found at all organizational levels and commercial operations (Trenerry,

1999).

Performance evaluations, physical controls, information processing controls,

reconciliation procedures, and separation of roles are examples of typical control activities.

Although there are various kinds of controls, various control classification schemes have been

studied and contested over time (Bower & Schlosser, 1965); (Heier et al., 2005).

Despite the fact that there are few empirical studies that look at the function of ERM in

and firm performance in banking in the financial crisis, the authors find that companies with

chief risk officers reporting to the board of directors generally perform better. (Arnold, Benford,

Canada, & Sutton, 2011)investigate the connection between organizational flexibility,

regulatory readiness, and ERM processes and discover a strong correlation between

organizational flexibility and regulatory responsiveness as well as between organizational

flexibility and the strength of ERM processes.

An intriguing analysis of operational risk in relation to the financial crisis is carried out by

(Andersen, Häger, Maberg, Næss, & Tungland, 2012). They examine the data from brokers,

banks, insurance firms, credit rating services, and investment banks, and discover that these

organizations' subpar operational risk management contributed to the financial crisis. The study

and business performance, however it depends on how well the ERM process fits with the

variables of uncertainty, complexity, size, competition, and board monitoring procedures. Their

quantitative research yielded significant results.

Administrators and managers must From this internal part, innovation begins. In order to

identify the business the firm is in or plans to be in and the type of company it is or is to be, a

strategy is a pattern of primary objectives, purposes or goals and fundamental policies or plans

for reaching organizational goals (Drucker, 2014). One of the most essential decisions a

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corporation must make is whether to innovate or not. If the business decides to innovate, it will

have to pick which sort of innovation strategy to use or a combination of several different types.

Product innovation, process innovation, marketing (market) innovation, and

organizational innovation, which correspond to four pure innovation strategies, are the four basic

consumers occasionally lack the knowledge and skills necessary to effectively use these

advancements (Ciubotariu, Socoliuc, Mihaila, & Savchuk, 2019); (Ianchuk, 2021).

When it comes to the insurance market, the problem of financial inclusion, as a willingness

to be an active user in the financial services market, and financial literacy of the public, as its

capacity to absorb new financial products Numerous scientific advancements have occurred in

this context. These include papers by (Gatsi, 2020); (Rehman, 2020);(Mihalcova, Gallo, &

Lukac, 2020); (Korcsmaros, Seben, Machova, & Feher, 2019), among others.

Numerous academic publications on the idea of big data and its use in diverse spheres of

human activity have been published during the past ten years (Delanoy & Kasztelnik, 2020) ; (Giebe,

Hammerström, & Zwerenz, 2019); Njegovanovi, 2018). The research of scientists like Porrini

Product innovation, according to Damanpour (Damanpour, 1990), is the introduction of a new

or significantly enhanced good or service that expands the variety and caliber of the existing

available goods.

Product innovation is regarded as an obvious way to increase revenue and, consequently,

performance. According to Camison and Lopez (2010), product innovation serves as a way to

reduce costs while also enhancing and securing quality. It is also praised for preserving and

improving a firm's competitive position and maintaining a strong market presence. Products that

are regularly enhanced are especially crucial for the long-term performance and growth of

businesses (Bayus, Erickson, & Jacobson, 2003). Product innovation is common among new

entrants in any business because it has been used to increase their market popularity in a

(Cano, Carrillat, & Jaramillo, 2004). Additionally, market orientation offers crucial data to businesses

that must contend with fierce international competition. Business executives are reassured that

the methods they implement will help them keep or even improve their position among other

insurance companies in terms of competition.

Product innovation is sometimes considered as being facilitated by organizational culture,

which is described as the shared beliefs, ideologies, or values of members of an organization.

An organization that grows and maintains a culture that sees the benefit of product innovation

Analysis of Business Resource Variables Affecting Insurance Sales (A Study of Insurance Companies Listed

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138 Return Management Studies, Economic and Business , Vol 2 (No 2), Feb 2023

and encourages its stakeholders, mainly its employees to develop new products is more likely to

succeed (Julienti, Bakar, & Ahmad, 2010).

Regulation, however, is a major barrier to the success of product innovation, which is why

it is not always effective (Lado & Maydeu‐Olivares, 2001). Governments impose laws to safeguard

Implementing a novel or significantly enhanced production or delivery method, involving

considerable adjustments to methods, apparatus, and/or software, is referred to as a process

innovation (OECD) (Oecd, 2005). Process innovation aims to lower production unit costs, raise

quality, and enhance the delivery of goods and services(Oke et al., 2007). Hippel (von Hippel,

2006) asserts that process innovation leads to the deployment of quality functions and the

reengineering of business processes.

This kind of innovation is occasionally regarded as sophisticated and challenging to

understand, but recent research and inquiry have made it simpler to comprehend. There is a

strong possibility that goods can be developed that give the same performance at a cheaper cost

when a mastery of productivity improvements is gained through time.

activities (Kotler, 1991).

Process innovation is defined as the use of a different or jointly improved creation or

delivery approach that comprises significant modifications to procedures, equipment, or

software. Handle improvement may be aimed to decrease unit costs for production or delivery,

increase item and delivery quality, or both (Tavassoli & Karlsson, 2015)

In order to enhance sales revenue, marketing innovation creates new markets or positions

the company's products in new markets. They have a close connection to price tactics, product

offers, design elements, product placements, and/or marketing initiatives (Tavassoli & Karlsson,

2015). Last but not least, firm technical innovation refers to the adoption of a new organizational

strategy in the company's operations, workplace structure, or external interactions.

workers. Farkas (Farkas & Tetrick, 1989) avoids saying that Most businesses and independent

agencies prefer to hire college graduates for jobs as insurance sales agents, especially those who

majored in business or economics. However, high school graduates may also be hired if they

have a track record of success in other fields or have demonstrated sales prowess. In actuality,

many people who become insurance sales agents transition from other professions.

Rohinton (Aga, 1994) asserts that agents have the honorable responsibility of analyzing

statistical data, including mortality, accident, sickness, and disability rates, and creating

probability tables to forecast risk and liability for the payment of future benefits. Agents may

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determine the necessary premium rates and cash reserves to ensure the payment of future

benefits. On the other hand, the insurance company's internal resources continue to develop new

products needed by the market. These new products require processing and enrichment of ideas,

and all come from data. Internal company data, market data, competitor data, etc .

i

X4 : Advertising;

X5 : Fixed assets;

β0 : Constant;

β1-5 : Variable coefficient;

j : Company;

t : Time;

ε : Error term.

The data analysis technique uses multiple linear regression analysis with panel data with

the help of EViews v.10 software. The three methods used are Common Effect Model (CEM),

The decision is seen from the Cross-Section F value. If the Cross-Section F value < (α =

0.05) then H0 is rejected, and the selected model is the fixed effect model. Meanwhile, if the

Cross-Section F value > (α = 0.05) then H0 does not reject and the selected model is the

common effect model. Furthermore, to obtain the most appropriate model, it is necessary to

carry out further testing, namely the Hausman Test (Porter & Gujarati, 2009); (Widarjono,

2018a). The Hausman test aims to select a Fixed effect or Random effect estimation model.

Hasuman Test Hypothesis, namely:

H0 = ModelsfollowRandom Effects Model

H

1

= ModelsfollowFixed Effects Model

Analysis of Business Resource Variables Affecting Insurance Sales (A Study of Insurance Companies Listed

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140 Return Management Studies, Economic and Business , Vol 2 (No 2), Feb 2023

Test Lagrange Multiplier(LM test)seen from the chi square distribution with the degree

of freedom of the number of independent variables. If valueLagrange Multiplier the statistic is

greater than the critical value of the chi square statistic, so reject H0, meaning that the most

appropriate model is Random Effect. Conversely, if the valueLagrange Multiplierstatistic is

because this study used the OLS (Ordinary Least Square) approach or the least squares method.

The classic assumption test in this study includes: normality test, multicollinearity test,

and heteroscedasticity test. The normality test aims to determine the independent variables and

the dependent variables are normally distributed. The normality test in this study used the

Jarque-Berra (JB) Test. The decision is that if the JB-count value < the X2 table value or the

JB-count probability value > the probability value α = 5% (0.05) then the residual, µt, is

normally distributed. On the other hand, if the calculated JB value > X2 table value or the JB-

count probability value < α = 5% (0.05) then the residual, µt, is not normally distributed (Porter

& Gujarati, 2009);(Widarjono, 2018a).

The multicollinearity test aims to determine whether the regression model equation used

the Glesjer test resultsie if the significance value < probability valueα = 5% then there are

symptoms of heteroscedasticity. Conversely, ifsignificance value > probability valueα = 5%,

there are no symptoms of heteroscedasticity in the model.

Next, the researcher tested the research hypothesis using the coefficient of determination

test (R2), t-test, and F-test. The Coefficient of Determination Test (R2) is used to measure the

ability of the model that the researcher has created to explain the dependent variable. If R2 is

getting smaller or closer to 0, then in explaining the variation the dependent variable is getting

weaker, but if the value of R2 is getting bigger or closer to 1, then in explaining the variation

the dependent variable is getting better.

The t-test aims to see whether or not the significance of each independent variable is

The decision is made if the t-count value < t-table or t-count probability > α = 5% (0.05),

then H0 is not rejected, meaning that the independent variable has no significant effect on the

dependent variable. But on the contrary, if the t-count value > t-table or t-count probability <

α = 5% (0.05) then H0 is rejected, meaning that the independent variable has a significant effect

on the dependent variable.

Furthermore, the F-test aims to see whether or not the independent variable is significant

to the dependent variable simultaneously or together. If the F-count value < F-table or F-count