The Importance of Institutional Pressure in Improving the Performance of Social Enterprise-Village Owned Enterprises: The Role of Social Performance as a Mediator

Improving the performance of social enterprises in rural areas has become a concern for researchers at this time.This study aims to analyze the impact of institutional pressure in improving the performance of social organizations, namely Village Owned Enterprises (VOE).We examine the effect of coercive, mimetic, and normative pressure on financial performance and analyze the mediating role of social performance.We explored as many as 239 VOE locations in 4 areas of Riau Province in Indonesia.Six hundred questionnaires were distributed to VOE managers, and 526 returned and processed questionnaires.The test results with the structural Equation Model with Warp-PlS showed that coercive and normative pressure directly affected financial performance, but mimetic pressure did not support it.The results of the study support that social performance is a mediator in the relationship between institutional pressure to financial performance.The research results contribute to VOE's always paying attention to the surrounding institutional environment.