The purpose of the current study was to uncover the behavior in the principal-agent relationship in the village fund management that was applied using local value approach. It used an interpretive paradigm approach by adopting the concept of principal-agent theory and institutional economic theory through tracking the behavior of informants in symbolic interaction that is reduced by local values in the culture of the Sumbawa people. To gain data, qualitative research and in-depth interview were applied. The research findings show that the lack of supervision conducted by the Village Consultative Body (VCB) on the use of village fund by the village leader causes the village leader to perceive himself in the use of village fund. The late financial report of Village fund has created the potential to risk the disbursement of funds. Based on the findings, it is suggested that the institutional model in the principal-agent relationship must be strengthened. It is necessary to develop the character of the executor character by including the internalization of values as a controller for the emergence of institutional management fraud.
Volume 11 | 08-Special Issue
Pages: 1393-1401