Analysis of the Impact of HR Development Policies, Work Culture, and Organizational Performance on Competitive Advantage in the Manufacturing Industry in Indonesia

ABSTRACT


INTRODUCTION
The manufacturing sector in Indonesia plays a crucial role in the country's economy, contributing significantly to employment generation, GDP growth, and export earnings.However, in the face of increasing competition both domestically and internationally, Indonesian manufacturing firms need to strategically leverage their human resources and organizational capabilities to create and sustain competitive advantage.This can be achieved by focusing on factors such as productivity growth, technological progress, and technical efficiency [1].Additionally, the implementation of an Industrial 4.0 strategy, which includes the establishment of a Digital Industry Center, can accelerate economic development in Indonesia [2].Furthermore, the development of the manufacturing industry in Indonesia has shown continuous growth over the years, even during the Covid-19 pandemic, indicating the resilience of the country's economic condition [3].Small and Medium Enterprises (SMEs) also play a significant role in the Indonesian economy, contributing to GDP growth, exports, and employment [4].By focusing on entrepreneurial orientation and absorptive ability, SMEs can enhance their competitive advantage [5].
Achieving and sustaining competitive advantage is crucial for organizations in the dynamic and competitive landscape of the manufacturing industry.Competitive advantage allows firms to differentiate themselves, attract customers, and thrive in the marketplace.Human Resource (HR) development policies, organizational culture, and organizational performance are critical factors that significantly influence a firm's competitive position [6], [7].
In recent years, scholars and practitioners have recognized the pivotal role of HR development policies in shaping organizational performance and competitive advantage.Effective HR practices encompass a range of activities, including recruitment, training, performance management, and employee development, all of which contribute to enhancing employee skills, motivation, and commitment [8]- [10].Moreover, the cultivation of a positive organizational culture, characterized by shared values, norms, and beliefs, is increasingly recognized as a crucial determinant of organizational effectiveness and competitive advantage [11].

LITERATURE REVIEW
The literature on the connection between organizational performance and work culture is expanding, but there is still a dearth of studies specifically focused on the manufacturing sector in Indonesia.Consequently, examining the impact of work culture on organizational performance in the Indonesian setting might yield significant insights for companies looking to strengthen their competitive edge through activities aimed at fostering a culture of innovation.
H2: Work culture has a positive and significant relationship with competitive advantage in the manufacturing industry in Indonesia.

Organizational Performance and Competitive Advantage
Organisational performance is an important factor in determining competitive advantage [6].Highperforming organisations are better equipped to meet customer demands, adapt to market changes, and take advantage of new opportunities, thus giving them a long-term advantage over competitors [7].Achieving operational excellence and outstanding performance is particularly important in the manufacturing sector, where competition is fierce [20].Businesses that excel in areas such as customer service, cost effectiveness, delivery speed, and product quality will gain an advantage and increase their market share [21]

Research Design
This study employs a quantitative research approach to investigate the relationships between HR development policies, work culture, organizational performance, and competitive advantage within the manufacturing sector in Indonesia.A cross-sectional survey design will be utilized to collect data from a sample of manufacturing firms operating in Indonesia.The survey will involve administering structured questionnaires to HR managers and employees to gather quantitative data on HR development policies, work culture dimensions, organizational performance indicators, and competitive advantage factors.

Sampling
The sample for this study will consist of 125 manufacturing firms selected from various industry segments within Indonesia.A stratified sampling technique will be employed to ensure adequate representation from different sectors and company sizes.The sampling frame will be constructed using industry databases and directories, and firms will be randomly selected from each stratum to participate in the study.The sample size of 125 was determined based on statistical considerations to ensure sufficient power for data analysis.

Data Collection
Data will be collected using structured questionnaires administered to HR managers and employees within the participating manufacturing firms.The questionnaire will include items measuring HR development policies, work culture dimensions (teamwork, communication, innovation), organizational performance indicators (financial performance, productivity, customer satisfaction), and competitive advantage factors (market share, brand reputation, product quality).The questionnaire items will be based on established scales and validated measures from previous research.
The data collection process will involve contacting potential participants via email or telephone to introduce the study and request their participation.Upon obtaining consent, participants will be provided with the questionnaire either in print or electronic format, depending on their preference.Participants will be assured of the confidentiality and anonymity of their responses, and they will be given sufficient time to complete the questionnaire.

Data Analysis
Data analysis for this study will employ Structural Equation Modeling (SEM) with Partial Least Squares (PLS) regression, recognized for its robustness in examining intricate relationships among multiple variables, making it ideal for exploratory research such as this.The process will encompass several steps.Initially, data cleaning and preprocessing will ensure completeness, accuracy, and consistency, with missing data addressed through techniques like mean substitution or imputation, while outliers and influential observations will be identified and managed through transformation or removal.Subsequently, the measurement model assessment will involve evaluating the reliability and validity of the questionnaire items using methods like Cronbach's alpha, composite reliability, and tests for convergent and discriminant validity, alongside Confirmatory Factor Analysis (CFA) to validate the underlying factor structure.Lastly, Structural Model Estimation will be conducted, estimating the relationships between latent variables (HR development policies, work culture, organizational performance, and competitive advantage) through PLS regression.Path coefficients will quantify the strength and significance of these relationships, with bootstrapping utilized to assess significance and overall model fit [23].

Demographic Sample
The demographic characteristics of the sample are presented in Table 1 below.The sample consists of 125 manufacturing firms operating in Indonesia.These demographic characteristics provide a comprehensive understanding of the sample composition, allowing for meaningful insights into the diversity and representation of different segments within the Indonesian manufacturing industry.

Measurement Model
The measurement model assesses the reliability and validity of the measurement instruments (questionnaire items) used to operationalize the latent constructs (variables) of HR development policies, work culture, organizational performance, and competitive advantage.The table below presents the loading factors, Cronbach's alpha, composite reliability, and average variance extracted for each variable.

Discriminant Validity
Discriminant validity assesses whether the constructs of interest are truly distinct from one another.In other words, it examines whether each construct measures something unique and different from the other constructs.The table below presents the correlation coefficients between the constructs, providing insights into their discriminant validity.By investing in comprehensive HR practices, fostering a positive work environment, and improving organizational performance, manufacturing firms can enhance their competitive advantage and achieve sustainable growth in today's dynamic business environment.HR practices have a significant impact on the effectiveness of manufacturing units, including areas such as human resource planning, recruitment and selection, training and development, and performance appraisal [12].Effective HRM practices help in better retention and utilization of human resources, resulting in improved organizational performance overall [9].HRM practices positively and significantly influence organizational performance, with recruitment and selection practices showing the strongest positive association [24].Human resource policies and practices play a major role in increasing employee performance and commitment, supporting the strategies and policies of an organization [25].Employee training and development, promotion opportunities, and job security have a significant influence on employee performance, contributing to the achievement of business goals [26].

CONCLUSION
In conclusion, this study provides valuable insights into the determinants of competitive advantage in the manufacturing sector in Indonesia.The findings highlight the importance of HR development policies, work culture, and organizational performance in shaping firms' competitive positions.By investing in comprehensive HR practices, fostering a positive work environment, and improving organizational performance, manufacturing firms can enhance their competitive advantage and achieve sustainable growth in today's dynamic business environment.The study's findings contribute to both theoretical understanding and practical implications for managers and policymakers seeking to promote competitiveness and economic development in the Indonesian manufacturing industry.Future research could explore additional factors influencing competitive advantage and investigate the effectiveness of specific HR interventions and organizational practices in enhancing firms' competitive positions.

Table 2 .
Measurement Model