833aca46-c534-4fb1-bd5e-5b7f3b0652eb20240416033959585wseas:wseasmdt@crossref.orgMDT DepositWSEAS TRANSACTIONS ON ENVIRONMENT AND DEVELOPMENT2224-34961790-507910.37394/232015http://wseas.org/wseas/cms.action?id=40311220241220242010.37394/232015.2024.20https://wseas.com/journals/ead/2024.phpFireraFireraDepartment of Business Administration, Faculty of Administrative Sciences, University of Brawijaya, Veteran St., Ketawanggede, Kec. Lowokwaru, Malang City, East Java 65145, INDONESIAMochammadAl MusadieqDepartment of Business Administration, Faculty of Administrative Sciences, University of Brawijaya, Veteran St., Ketawanggede, Kec. Lowokwaru, Malang City, East Java 65145, INDONESIASolimunSolimunDepartment of Statistics, Faculty of Mathematics and Natural Sciences, University of Brawijaya, Veteran St., Ketawanggede, Kec. Lowokwaru, Malang City, East Java 65145, INDONESIABennyHutahayanDepartment of Business Administration, Faculty of Administrative Sciences, University of Brawijaya, Veteran St., Ketawanggede, Kec. Lowokwaru, Malang City, East Java 65145, INDONESIAThis research investigates the relationship between purchasing performance and material inventory performance with the fiscal term as a moderating variable on sustainable economic levels in Indonesia's upstream oil and gas industry. Data were collected over five years (2017-2021) from 26 Production Sharing Contract Contractors (PSCC) in Indonesia during the preliminary Plan of Development (POD) phase. This research uses Structural Equation Modeling (SEM). The results showed that purchasing performance significantly affects sustainable economic levels, and material inventory performance has no significant effect on sustainable economic levels. Fiscal term moderation on the influence of purchasing arrangements on sustainable economic levels has a significant impact. In contrast, fiscal term moderation on the influence of material inventory performance on sustainable economic levels has an insignificant effect. This research provides a comprehensive framework by explaining the influence of purchasing performance and material inventory performance with the fiscal term moderating variable on sustainable economic levels as a novelty in this research.415202441520249510711https://wseas.com/journals/ead/2024/a225115-1114.pdf10.37394/232015.2024.20.11https://wseas.com/journals/ead/2024/a225115-1114.pdf10.1038/s41560-019-0350-1Ansari, E., & Kaufmann, R. K. (2019). The effect of oil and gas price and price volatility on rig activity in tight formations and OPEC strategy. Nature Energy, 4(4), 321-328. 10.1016/j.eneco.2018.05.020Choi, B., & Kim, S. T. (2018). Price volatility and risk management of oil and gas companies: Evidence from oil and gas project finance deals. Energy Economics, 76(1), 594- 605. Widjajono, P. (2009). Oil and gas and energy in Indonesia. Bandung: Development Studies Foundation Press. 10.1061/(asce)ey.1943-7897.0000860Mwakipunda, G. C., Yang, Z., & Guo, C. (2023). Infill Drilling Optimization for Enhanced Oil Recovery by Waterflooding: A Simulation Study. Journal of Energy Engineering, 149(1), 04022053. 10.22212/jbudget.v7i2.128Paramita, R. (2022). Problems and challenges in increasing investment in the upstream oil and gas industry. (Permasalahan dan tantangan peningkatan investasi industri hulu migas), Budget Journal: State Financial Issues and Problems, 7(2), 181–202. 10.1016/j.jclepro.2020.122739Becker, S., Bouzdine-Chameeva, T., & Jaegler, A. (2020). The carbon neutrality principle: A case study in the French spirits sector. Journal of cleaner production, 274(1), 122739. 10.32479/ijeep.7810Al Janahi, A., Kukreja, G., and Hamdan, A. (2019). Petroleum production sharing contracts in the Middle East: Application of economic evaluation and decision-making modeling, International Journal of Energy Economics and Policy, 9(6),12-25. Ariyon, M., & Dewi, E.K. (2018). Comparative Study of the Economics of Marginal Oil Field Development Using Production Sharing Contracts and Gross Split. Seminar Nasional Teknologi dan Rekayasa, 4(1), 23-29. 10.1016/j.enpol.2019.04.035Acquah-Andoh, E., Putra, H. A., Ifelebuegu, A. O., & Owusu, A. (2019). Coalbed methane development in Indonesia: Design and economic analysis of upstream petroleum fiscal policy. Energy Policy, 131(April), 155– 167. 10.2469/faj.v26.n3.108Babcock, G.C. (1970). The Concept of Sustainable Growth, Financial Analysts Journal, 26(3), 108-114. Priaga, M. A., & Daryanto, W. M. (2020). Capital Budgeting Of Mandala Block Under Indonesia’s Gross Split Production Sharing Contract. International Journal of Business, Economics and Law, 23(1), 83-92. 10.1108/jsma-08-2016-0050Cavaleri, S., & Kareem, S. (2018). Rethinking sustainability strategies Steven. Journal of Strategy and Management, 11(1), 2–17. 10.1002/bse.2428Shashi, Centobelli, P., Cerchione, R., & Ertz, M. (2020). Managing supply chain resilience to pursue business and environmental strategies. Business Strategy and the Environment, 29(3), 1215–1246. Bala, R., & Sharma, A. (2012). Purchasing Efficiency Impact on Inventory Valuation and Company's Performance. International Journal of Management, IT and Engineering, 2(7), 89-95. 10.1111/auar.12090Uyar, A., & Kuzey, C. (2016). Contingent factors, extent of budget use and performance: A structural equation approach. Australian Accounting Review, 26(1), 91-106. Keynes, J. M. (1937). The general theory of employment. The Quarterly Journal of Economics, 51(2), 209-223. 10.1088/1755-1315/446/5/052078Yun, P., Jia, L., Jie Xin, Y., Du Fen, S., Yu Wen, C., Hong Wei, L., Zhao, Z., & Feng, G. (2020). Indonesia’s New Petroleum Fiscal Regime: Fiscal Changes, Impacts and Future Trends. IOP Conference Series: Earth and Environmental Science, 446(5), 052078. Jacoby, D. (2012). Optimal Supply Chain Management in Oil, Gas and Power Generation. United States: PennWell Books. Chimwani, B. I., Iravo, M. A., & Tirimba, O. I. (2014). Factors influencing procurement performance in the Kenyan public sector: case study of the state law office. International Journal of Innovation and Applied Studies, 9(4), 1626. 10.1016/j.ejor.2018.11.063Li, L. (2019). Cooperative purchasing and preactive inventory sharing – Channel balancing and performance improvement. European Journal of Operational Research, 278(3), 738–751. 10.1111/j.1745-493x.1996.tb00216.xCarter, J. R., & Narasimhan, R. (1996). Is purchasing really strategic?, International Journal of Purchasing and materials management, 32(4), 20-28 10.1016/j.pursup.2017.05.002Akın Ateş, M., van Raaij, E. M., & Wynstra, F. (2018). The impact of purchasing strategystructure (mis)fit on purchasing cost and innovation performance. Journal of Purchasing and Supply Management, 24(1), 68–82. 10.1016/j.pursup.2008.03.002Nollet, J., Calvi, R., Audet, E., & Côté, M. (2008). When excessive cost savings measurement drowns the objectives. Journal of Purchasing and Supply Management, 14(2), 125-135. 10.36655/jeb.v2i2.557SKK Migas. (2021). 2021 Oil and Gas Subsector Performance and 2022 Work Plan (Translation: Ini Kinerja Subsektor Migas Tahun 2021 Dan Rencana Kerja 2022), [Online]. https://migas.esdm.go.id/post/read/ini-kinerjasubsektor-migas-tahun-2021-dan-rencanakerja-2022 (Accessed Date: December 8, 2023). 10.5465/amr.2001.4845803Jawahar, I. M., & McLaughlin, G. L. (2001). Toward a descriptive stakeholder theory: An organizational life cycle approach. Academy of Management Review, 26(3), 397-414. 10.1287/mksc.2020.1279Jacobs, B., Fok, D., & Donkers, B. (2021). Understanding large-scale dynamic purchase behavior. Marketing Science, 40(5), 844-870. 10.1016/j.pursup.2019.04.002Schütz, K., Kässer, M., Blome, C., & Foerstl, K. (2020). How to achieve cost savings and strategic performance in purchasing simultaneously: A knowledge-based view. Journal of Purchasing and Supply Management, 26(2), 100534. 10.11114/ijsss.v4i7.1662Selvam, M., Gayathri, J., Vasanth, V., Lingaraja, K., & Marxiaoli, S. (2016). Determinants of firm performance: A subjective model. International Journal of Social Science Studies, 4(7), 90-100. 10.1080/09537287.2012.743686Caniato, F., Luzzini, D., & Ronchi, S. (2014). Purchasing performance management systems: An empirical investigation. Production Planning and Control, 25(7), 616–635. 10.5220/0008441805000509Siahaan, Y., Susanti, E., & Sudirman, A. (2020). Effect of firm characteristics on firm value through triple bottom line disclosure: Pharmaceutical companies listed on Indonesia stock exchange. International Journal of Scientific and Technology Research, 9(2), 2228-2234. 10.1109/icacci.2018.8554433Kumar, S. PM, Sanjeev L, Sagayam, M. S and Janardhanan, A. (2018). Performance and Purchasing effects of Healthcare Supply Chain. International Conference on Advances in Computing, Communications and Informatics (ICACCI). Bangalore, India. 10.17559/tv-20171130164306Lalić, B., Delić, M., Simeunović, N., Tasić, N., & Cvetković, S. (2019). The impact of quality management purchasing practices on purchasing performance in transitional economies. Tehnicki Vjesnik, 26(3), 815–822. 10.1080/00207543.2015.1047983Nair, A., Jayaram, J., & Das, A. (2015). Strategic purchasing participation, supplier selection, supplier evaluation and purchasing performance. International Journal of Production Research, 53(20), 6263–6278. 10.1108/scm-07-2019-0284Arora, A. S., Sivakumar, K., & Burke, G. (2020). Strategic sustainable purchasing, environmental collaboration, and organizational sustainability performance: the moderating role of supply base size. Supply Chain Management, 25(6), 709–728. 10.1287/mnsc.29.1.33Quinn, R. E., & Cameron, K. (1983). Organizational life cycles and shifting criteria of effectiveness: Some preliminary evidence. Management Science, 29(1), 33-51. Monczka, R., Trent, R., & Handfield, R. (2004). Purchasing and Supply Chain Management. United States: Southwestern College Publishing. Sajari, I., Elfiana, & Martina. (2017). Feasibility Analysis of Chips Business at UD. Roses in Gampong Batee Ie Liek, Samalanga District, Bireuen Regency. Jurnal S. Pertanian, 1(2), 116–124. Gopalakrishnan, P., & Haleem, A. (2015). Handbook of materials management. Delhi: PHI Learning Pvt. Ltd. 10.1016/j.jclepro.2017.08.106Singh, A., & Verma, P. (2017). Factors influencing Indian consumers' actual buying behaviour towards organic food products. Journal of Cleaner Production, 167(1), 473- 483. Markowitz, H (1952). Portfolio Selection, The Journal of Finance, 7(1), 77-91. Embuningtiyas, S.S., Puspasari, O.R., Gede Satia Utama, A.A., and Ardianti, R.I. (2020). Bank Financial Soundness and the Disclosure of Banking Sustainability Reporting in Indonesia. Int. J. Innov. Creat. Chang., 10(120, 237–247. 10.1016/j.egycc.2020.100010Wachtmeister, H., & Höök, M. (2020). Investment and production dynamics of conventional oil and unconventional tight oil: Implications for oil markets and climate strategies. Energy and Climate Change, 1(1), 100010. 10.7441/joc.2017.03.02Batchimeg, B. (2017). Financial Performance Determinants of Organizations: The Case of Mongolian Companies. Journal of Competitiveness, 9(3), 22-23. 10.2523/22016-msHightower, M. L., & David, A. (1991, April). Portfolio modeling: a technique for sophisticated oil and gas investors. SPE Hydrocarbon Economics and Evaluation Symposium, Dallas, Texas, April 1991. Bush, J. W. and Johnston, D. (1998). International Oil Company FM in Nontechnical Language. PennWell Nontechnical Series. United States: PennWell Books. Wheelen, T.L. and Hunger. (2012). Strategic Management and Business Policy: Achieveing Sustainability, 13th ed, Harlow: Pearson Prentice Hall. Higgins, R. C. (1981). Sustainable growth under inflation. Financial Management, 10 (4), 36-40. Johnston, D. (1994). International Petroleum Fiscal Systems and Production Sharing Contracts. United States: PennWell Publishing Company. 10.1088/0034-4885/22/1/303Musgrave, M. J. P. (1959). The propagation of elastic waves in crystals and other anisotropic media. Reports on progress in physics, 22(1), 74. 10.1080/00207543.2011.613869Obermaier, R., & Donhauser, A. (2012). Zero inventory and firm performance: a management paradigm revisited. International Journal of Production Research, 50(16), 4543-4555. Lubiantara, B. (2012). The Analysis of the Marginal Field Incentive—Indonesian Case. Oil, Gas & Energy Law Journal (OGEL), [Online]. www.ogel.org/article.asp?key=2432 (Accessed Date: December 8, 2023). 10.5901/mjss.2015.v6n1p109Lingaraja, K., Vinayagamoorthi, V., & Selvam, M., (2015). Impact of firms' profitability on environmental performance: evidence from companies in India. Mediterranean Journal of Social Sciences, 6(1), 109-119. 10.5897/ajbm2019.8904Abbey, K. and Ong’unya, G. O. (2019). Purchasing performance and profitability in foam mattress firms in Uganda. African Journal of Business Management, 13(18), 630-635. 10.5539/ass.v10n1p250Sobhani, M., Malarvizhi, C. A., Al-Mamun, A., & Jeyashree, S. (2014). Strategic purchasing and Sustainable Economic Levels of Iranian Manufacturing companies. Asian Social Science, 10(1), 250. Duangjan, C. (2018). Sustainable purchasing and business performance in manufacturing industries. European Journal of Business and Management, 10(9), 176 – 181. Faustin, B., Gamariel, M. (2021). Effect of Contract Management on Purchasing Performance in Procuring Entities: A Case of Rwanda Energy Group (Reg), Kigali. Social Science Learning Education Journal, 6(11), 751-757. 10.1016/j.ijpe.2012.03.025Hofer, C., Eroglu, C., & Hofer, A. R. (2012). The effect of lean production on financial performance: The mediating role of inventory leanness. International Journal of Production Economics, 138(2), 242-253. 10.1007/978-3-540-71659-4Jonker, J., & Pennink, B. (2010). The essence of research methodology: A concise guide for master and PhD students in management science. German: Springer Science & Business Media. Solimun, Fernandes, A.A.R., & Nurjannah (2017), Multivariate Statistical Method Structural Equation Modeling (SEM) WarpPLS Approach. Malang: UB Press. Ghozali, I. (2016). Multivariate Analysis Applications Using the IBM SPSS 23 Program. 8th Edition. Semarang: Badan Penerbit Universitas Diponegoro. Latan, H., & Ghozali, I. (2012). Partial Least Square: Concepts, Techniques and Applications of Smart PLS 2.0 M3. Semarang: Badan Penerbit Universitas Diponegoro. Hennig, C. (2015) What are the true clusters? Pattern Recognit Lett, 64 (1), 53–62. Chin, W. W. (1998). The partial least squares approach for structural equation modeling. In G. A. Marcoulides (Ed.), Modern methods for business research, pp. 295–336, Lawrence Erlbaum Associates Publishers. Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010) Multivariate Data Analysis. 7th Edition, New York: Pearson. Williamson, O. E (1986). Transaction cost economics: The comparative contracting perspective, Journal of Economic Behavior & Organization, 8 (4), 617-625. Friedman, M. (1962). Capitalism and freedom. Chicago: University of Chicago Press. 10.2307/1927555Metzler, L. A. (1941). The nature and stability of inventory cycles. The Review of Economics and Statistics, 23(3), 113-129. Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.