Resource Orchestration and Dual Constraints: The Moderating Role of Risk Management on Financing Portfolio Quality of A Representative Islamic Business Unit of Regional Development Bank in Sumatra

Abstract

Indonesia’s Islamic banking industry faces a structural paradox: rapid asset growth is not matched by consistent portfolio quality, particularly in Sharia Business Units (SBUs) operating under a dual banking system. This study investigates how risk management moderates the relationships between competence, Sharia compliance, and collection strategy on financing portfolio quality in Regional Development Banks (RDBs), integrating Resource Orchestration Theory, Enabling Bureaucracy Theory, and Institutional Logic Theory within a Maqasid al-Shariah framework. A quantitative explanatory design was employed, using a census survey of 111 financing authority holders at the Sharia Business Unit of Bank Sumut, Medan, analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.0. Results indicate that employee competence and Sharia compliance collectively account for 80.6% of variance in portfolio quality (R²=0.806), confirming the primacy of preventive ex-ante controls over ex-post
recovery efforts. The study’s crucial finding reveals a “Dual Constraints” phenomenon: risk management effectively functions as an enabling bureaucracy in amplifying commercial competence (β=0.187, p=0.013), yet fails to organically integrate religious logic (Sharia
compliance), leaving both governance systems operating in parallel without mutual reinforcement. These findings contribute theoretically to Resource Orchestration Theory in multi logic organizational contexts and operationalize hifdz al-mal within modern banking risk management. Policy recommendations direct OJK to mandate the Maqāṣid-Based Risk Scorecard and RDB boards of directors to establish the Shariah Risk Officer position to align commercial and religious logics in regional banking operations.