Hindu-Based Sustainability Management in Community Microfinance Institutions: Evidence from Village Credit Institutions (LPDs) in Bali

Abstract

Sustainability management has become a strategic imperative for organizations seeking to balance economic performance with social responsibility and environmental stewardship. While contemporary sustainability frameworks are largely derived from secular management theories, limited attention has been given to indigenous and religious value systems that may contribute to sustainable organizational governance. This study aims to identify the Hindu principles relevant to sustainability management, to analyzed influence on the financial performance of Village Credit Institutions (Lembaga Perkreditan Desa/LPDs) in Bali, and to explain their contribution to business sustainability through the mediating role of financial performance. Employing a sequential mixed-method design, the research integrates hermeneutic analysis of Hindu scriptures (Sarasamuccaya and Bhagavad Gita), in-depth interviews with five expert informants, longitudinal financial data from 1,308 LPDs (2015-2023), and survey data from 90 LPD officers across nine regencies/cities in Bali, analyzed using Structural Equation Modeling-Partial Least Square (SEM-PLS). the structural model explains 41.4% of the variance in financial performance and 26.4% of the variance in business sustainability. The findings indicate that Karma (β=0.347, p=0.002) and Dharma (β=0.341, p=0.023) exert a significant positive influence on financial performance, whereas Kama (β=0.152, p=0.137) and Artha (β=0.013, p=0.920) do not.  Financial performance, in turn, significantly drives business sustainability (β=0.514, p=0.001), and mediates a significant indirect effect of Karma and Dharma on sustainability, while the indirect effects of Kama and Artha remain non-significant. These results indicate that ethical work conduct (Karma) and moral-social responsibility (Dharma) are the principal religious drivers of LPD performance and sustainability, while desire-fulfillment (Kama) and wealth accumulation (Artha) function only as supporting, Dharma-conditioned factors. The study contributes to the sustainability management literature by repositioning the LPD as a financial-religious institution and by proposing a Hindu-based sustainability management framework that extends the conventional Triple Bottom Line into a Profit-People-Planet model grounded in Karma, Dharma, Kama, Artha, and Tri Hita Karana. The findings offer practical insights for LPD managers, customary village authorities, and policymakers seeking culturally embedded governance frameworks for sustainable community-based microfinance.