Exploration of Governance, Institutional and Technology Adaptation Models of Village-Owned Enterprises (Bumdes) in Encouraging Village Independence

Abstract

This study develops an integrative adaptive governance model for Village-Owned Enterprises (BUMDes) by combining governance reform, institutional strengthening, and technological adaptation to support rural economic self-reliance. The research addresses the persistent challenges faced by BUMDes in Kolaka Regency, Indonesia, where only 38 of 100 enterprises remain active and only 8 possess legal status. Weak managerial capacity, unclear remuneration systems, and the absence of standardized operating procedures have contributed to low organizational performance, declining motivation, and reduced community trust. Using a qualitative case study approach with Participatory Action Research (PAR), data were collected through observation, focus group discussions, in-depth interviews, and document analysis. Participatory Rural Appraisal (PRA) was employed to identify root causes of institutional problems, while stakeholder analysis using Empathy Mapping and the Power–Interest Grid examined actor dynamics. Dynamic System Modeling (DSM) supported by Causal Loop Diagrams (CLD) was applied to analyze systemic relationships among governance variables. Data were analyzed using Creswell’s spiral model. The findings reveal that weak institutional legitimacy, inadequate legal foundations, and limited human resource capacity are the primary barriers to BUMDes sustainability. Stakeholder mapping identifies village heads, BUMDes managers, and facilitators as key actors in institutional reform, while youth and women remain underutilized resources for participatory innovation. System dynamics analysis shows that reinforcing feedback loops sustain organizational decline, whereas balancing loops emerge through adaptive interventions, including capacity-building programs, transparent operating procedures, and participatory governance forums. The study contributes a novel adaptive governance framework that integrates governance, institutional design, and technological adaptation, offering practical guidance for strengthening BUMDes sustainability and rural development.