The Role of Internal Governance in Managing Financial Risks Associated with Digital Transformation in Manufacturing Firms

Karnawi Kamar; Abdul Khalik; Tyahya Whisnu Hendratni; Roni Adi

doi:10.55927/fjst.v5i1.363

Authors

Karnawi Kamar Universitas Insan Pembangunan Indonesia
Abdul Khalik Institut Teknologi dan Bisnis Nobel Indonesia Makassar
Tyahya Whisnu Hendratni Sekolah Tinggi Ilmu Administrasi Lancang Kuning
Roni Adi Institut Teknologi Batam

DOI:

https://doi.org/10.55927/fjst.v5i1.363

Keywords:

Internal Governance, Financial Risks, Digital Transformation, Manufacturing Firms

Abstract

This study examines the role of internal governance in mitigating financial risks during digital transformation in the manufacturing industry. Using a mixed-methods approach, quantitative data were collected through a survey of 40 manufacturing companies in Banten Province that have implemented digital initiatives, complemented by in-depth interviews with eight key informants. Quantitative analysis and thematic qualitative analysis reveal that effective internal control mechanisms, strong integration between audit and risk management functions, and consistent managerial supervision significantly reduce financial risk exposure during the digitalization process. The findings highlight internal governance as a critical factor in ensuring controlled digital transformation and enhancing financial sustainability. This study contributes theoretically to governance and digitalization literature and provides practical insights for risk control strategies and technology investment policies in the manufacturing sector.

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