SOCIAL CAPITAL EFFECTIVENESS TOWARD COMPETITIVE ADVANTAGE AND BUSINESS PERFORMANCE (CASE STUDY OF VILLAGE CREDIT INSTITUTIONS IN GIANYAR REGENCY, BALI, INDONESIA)

One of the institutional uniqueness in Bali is the existence of custom villages. The Provincial Government of Bali has not been able to take operational funding policies to the level of traditional villages, so there are still many village potentials that still need to be explored and developed for the welfare of the community. To realize this, the Bali Provincial Government triggered the establishment of a Village Credit Institution (LPD) in all traditional villages in Bali. LPD is part of village assets that have the potential to improve the people's economy. This research was conducted to analyze: (1) the effect of social capital on competitive advantage and business performance of LPD; (2) the effect of competitive advantage on business performance of LPD; and (3) the role of competitive advantage as mediator between social capital and business performance of LPD in Gianyar Regency. The population in this study were all LPDs in Gianyar Regency, with a sample of 73 LPD managers, of which respondents were determined by proportional sfratified random sampling technique. The data collection technique was done by questionnaire instrument, and continued with SEM-PLS analysis. The results show that social capital has a positive and significant effect on competitive advantage and also on LPD's business performance. Competitive advantage also has a positive and significant effect on LPD's business performance. On the other side, competitive advantage also as significant mediator between social capital and LPD's business performance in Gianyar Regency.