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| Illustration by Ai |
A new study published in 2026 reveals that construction companies listed on the Indonesia Stock Exchange (IDX) can significantly improve their operational performance by strengthening financial management and operational efficiency. The research was conducted by Danang Artdy Santoso, Mulyanto Nugroho, and Nekky Rahmiyati from Universitas 17 Agustus 1945 Surabaya, and highlights how liquidity, profitability, capital structure, and working capital management shape business outcomes in one of Indonesia’s most strategic industries. The findings matter because the construction sector remains a key driver of infrastructure development and economic growth, while also facing increasing pressure from financing costs, project delays, and market uncertainty.
The study, published in the International
Journal of Applied and Advanced Multidisciplinary Research (IJAAMR), can be
accessed through the journal’s official platform and DOI: https://doi.org/10.59890/ijaamr.v4i7.247.
Construction Firms Face
Increasing Financial Pressures
Indonesia’s construction industry
has experienced significant volatility in recent years. Between 2021 and 2025,
many companies encountered challenges linked to post-pandemic recovery, rising
material prices, large debt obligations, and cash-flow constraints. These
conditions created substantial differences in operational performance among
firms listed on the stock exchange.
Some companies recorded strong
operational improvements, while others struggled with declining profitability
and operational disruptions. According to the researchers, these contrasting
outcomes indicate that corporate success is influenced not only by revenue
generation but also by how effectively companies manage costs, financing, and
operational resources.
As competition intensifies and
infrastructure projects become more complex, understanding the factors that
drive operational performance has become increasingly important for investors,
managers, and policymakers.
How the Research Was Conducted
The researchers examined 20
construction companies listed on the Indonesia Stock Exchange over a five-year
period from 2021 to 2025. Using audited annual reports and financial data
obtained from the IDX and Yahoo Finance, the team analyzed 100 company-year
observations.
The study applied a quantitative
approach and evaluated relationships among several key financial indicators:
- Liquidity
- Profitability
- Capital structure
- Working capital management
- Operational efficiency
- Operational performance
The analysis was conducted using
Structural Equation Modeling–Partial Least Squares (SEM-PLS), allowing the
researchers to identify both direct and indirect effects among the variables.
Operational Efficiency Emerges
as a Critical Factor
One of the strongest conclusions
from the study is that operational efficiency serves as a bridge between
financial management and business performance.
The research found that:
- Liquidity positively influences operational
efficiency.
- Profitability positively influences operational
efficiency.
- Capital structure positively influences operational
efficiency.
- Working capital management positively influences
operational efficiency.
Operational efficiency itself was
found to have a significant positive effect on operational performance.
Companies that managed resources, costs, and operational processes more
efficiently achieved better performance outcomes.
The model also demonstrated
strong explanatory power. Financial variables explained 56.4 percent of
operational efficiency, while the combined model explained 66.9 percent of
operational performance among construction companies.
Profitability and Capital
Structure Deliver Direct Benefits
The study identified
profitability as one of the most influential drivers of operational
performance.
Companies with stronger profits
were better positioned to invest in productive assets, technology, and
workforce improvements. These investments contributed to higher productivity
and more effective project execution.
Capital structure also showed a
positive impact. Firms that maintained an effective balance between debt and
equity were able to secure sufficient funding for operations and expansion
activities. The researchers noted that appropriate financing arrangements can
improve managerial discipline and strengthen operational capacity.
Similarly, effective working
capital management improved operational performance by accelerating asset
turnover, supporting smoother operations, and reducing unnecessary costs.
Liquidity Alone Is Not Enough
One of the study’s most notable
findings is that liquidity does not directly improve operational performance.
While companies with strong liquidity can meet short-term obligations more
easily, excess cash does not automatically translate into higher productivity
or profitability.
The researchers found that
liquidity contributes to performance only when it improves operational
efficiency. In other words, available financial resources must be transformed
into productive operational activities before companies can achieve measurable
performance gains.
This finding offers an important
lesson for business leaders. Maintaining large cash reserves may provide
financial security, but operational success depends on how effectively those
resources are deployed.
Academic Insight from
Universitas 17 Agustus 1945 Surabaya
The researchers from Universitas
17 Agustus 1945 Surabaya emphasize that financial strength alone does not
guarantee superior performance. Their findings indicate that operational
efficiency functions as a strategic mechanism that converts liquidity,
profitability, and working capital management into tangible operational
results. Companies that focus on efficient resource utilization are more likely
to achieve sustainable growth and competitiveness.
This conclusion reinforces the
importance of integrating financial planning with operational management rather
than treating them as separate business functions.
Implications for Business and
Policymakers
The findings carry important
implications for Indonesia’s construction industry and the broader business
community.
For corporate executives, the
study highlights the value of improving operational efficiency through better
project management, resource allocation, and cost control.
For investors, the research
suggests that evaluating profitability, working capital management, and
operational efficiency may provide deeper insight into future company
performance than liquidity measures alone.
For policymakers, the findings
demonstrate how stronger corporate governance and financial discipline can
contribute to a more resilient construction sector capable of supporting
national infrastructure goals.
As Indonesia continues investing
heavily in infrastructure development, improving operational efficiency may
become one of the most effective strategies for ensuring that construction
companies remain financially sustainable and globally competitive.
Author Profile
Danang Artdy Santoso is a
researcher from Universitas 17 Agustus 1945 Surabaya specializing in
financial management and corporate performance analysis. He collaborated with Prof.
Dr. Mulyanto Nugroho and Dr. Nekky Rahmiyati, academics from the
same university whose expertise includes finance, business management,
corporate governance, and organizational performance. Their research focuses on
improving business competitiveness through effective financial and operational
strategies.
Source
Article
Title: The Effect of Liquidity, Profitability, Capital Structure, and
Working Capital Management on Operational Performance Through Operational
Efficiency as an Intervening Variable in Construction Companies Listed on the
Indonesia Stock Exchange
Authors: Danang Artdy Santoso, Mulyanto Nugroho, Nekky Rahmiyati
Journal: International Journal of Applied and Advanced
Multidisciplinary Research (IJAAMR)
Year: 2026
DOI: https://doi.org/10.59890/ijaamr.v4i7.247
Journal URL:
https://nvlmultitechpublisher.my.id/index.php/ijaamr/index
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