The role of governance and servant leadership in enhancing asset management of village-owned enterprises: The evidence from the Indonesian legal context

Governance plays a crucial role in ensuring accountability, transparency, and efficiency in managing public resources (Komite Nasional Kebijakan Governansi [KNKG], 2021; Organisation for Economic Co-operation and Development [OECD], 2015). In community-based enterprises such as village-owned enterprises (Badan Usaha Milik Desa, BUMDes), effective governance determines the sustainability of village economic development and the optimal use of public assets. Building on these perspectives, this study examines how governance influences fixed asset management in BUMDes in Pacitan Regency, Indonesia, and investigates the moderating role of servant leadership. Primary data were collected from 88 BUMDes managers using a structured questionnaire and analyzed with partial least squares structural equation modeling (PLS-SEM). The results show that governance significantly enhances fixed asset management through systematic planning, consistent maintenance, and efficient utilization of resources. However, servant leadership does not significantly moderate this relationship, suggesting that traditional leadership culture may limit its application. This study contributes to stakeholder theory (Freeman, 1984) and leadership literature by integrating governance and servant leadership in the context of community-based public enterprises. Practical implications highlight the need for managerial training, participatory decision-making, and governance frameworks aligned with local leadership culture to support sustainable village development.