Unlocking public sector excellence: The synergy of intellectual capital and digital leadership in tax administration

Abstract

Purpose: This study investigates the impact of intellectual capital, specifically public human capital, public relational capital, and public structural capital, on the Directorate General of Taxes (DGT) organizational performance in Indonesia. It also examines the moderating role of digital leadership in enhancing these relationships.

Design/methodology/approach: The study employs primary data collected through a survey involving 195 employees from various Tax Service Offices (KPP) within DGT regional offices across Indonesia. The analysis is conducted using structural equation modeling to test the hypothesized relationships.

Findings: The results reveal that public human capital, relational capital, and structural capital positively affect DGT's organizational performance. However, while contributing directly to organizational performance, digital leadership does not significantly moderate the relationship between intellectual capital components and performance. Challenges in integrating digital leadership with existing structures and interpersonal engagements may explain this finding.

Research limitations/implications: The sample, although diverse, may not fully represent all tax offices in Indonesia, limiting the generalizability of results. The unique characteristics of DGT may also influence the applicability of findings to other public sector organizations.

Practical implications: Recommendations include enhancing employee training programs to leverage digital tools, optimizing organizational structures to support digital integration, and strengthening digital leadership strategies that align with human capital development and stakeholder engagement.

Social implications: By improving intellectual capital management and digital leadership, public sector organizations like DGT can enhance service quality and stakeholder trust, leading to better compliance and public service outcomes.

Originality/value: This study contributes to the literature by focusing on the public sector organization and integrating digital leadership as a moderating factor, a novel approach to understanding how non-accounting elements can bolster public sector performance.