The Role of Intellectual Capital in Mediating the Effect of Knowledge Management on The Performance of State-Owned Bank Branch Offices in West Java

Hady Siti Hadijah (Lecturer of Office Management Departement Indonesia University of Education) Email : hady@upi.edu

Abstract: ASEAN Economic Community (AEC) for the banking industry agreed in 2020. Competition among ASEAN banks is going to be open. The Indonesian state-owned banks are facing big huge chalanges. One thing for sure is that DBS was awarded the best bank of Asia Pacific in 2014. For this reason this red plated four banks prepare by strengthening capital, IT skills, products, services, human resources and efficiency. Efforts to increase competitiveness and intermediation role of banks, is done through the improvement of knowledge management. Expected more branch offices are able to leverage its resources to achieve organizational goals. The study aims to determine the influence of knowledge management on the performance of the branch offices of State Owned Bank in West Java intellectual capital as an intervening variable. The results showed that the success of knowledge management in enhancing the intellectual capital is the key to improving the performance of the branch office.

Keywords : Transformational Leadership , Knowledge Management , Intellectual Capital , Bank Performance

1. Introduction

ASEAN Economy Community banking industry was launched in 2020. Starting this year, banks are in the ASEAN region have the freedom to conduct banking activities across the country. All banks are free to do banking transactions activity, the inclusion in it of transactions involving the flow of investment and a skilled workforce .

Currently the state-owned banks still have reasonably good positioning on a national scale. But later, once the agreement AEC industry banking services entered into force, state-owned banks will feel the weight of the level of competition, especially competition coming from Singapore banking , for example DBS years on was asked to become the best bank in Asia Pacific 2014 version of Global Finance . This award is a recognition that Singapore banks have the right positioning strategy. Of the best banks in the ASEAN region emerged as the best bank in the Asia Pacific region.

DBS bank case is an illustration of how strong later when the bank is already free to move in Indonesia, a country in Southeast Asia with a population of greatest approximately two hundred and fifty million people with a total area population was the most extensive. Beyond the issue of banking assets total

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strength of Singapore's banks, there are things that need attention berplat banks want to stick nails red when sharper in his own country. The first problem, is the ability of state-owned banks in raising third party funds. With a large population, and supported by the potential of Indonesia as a country with respectable economic power on an international scale. Allegedly, the majority of Indonesian citizens who have substantial funds would rather save their money abroad. One of the favorite country is Singapore. This condition should receive great attention from state-owned banks to be assured that their bank it has the added value that is greater than the favorite banks in other countries in the ASEAN region. State-owned banks through branch offices of the bank is spearheading the bank spread across various regions are able to attract the public to deposit funds in their branch offices as the main option. The second problem, inefficiency high operational costs can reduce the potential for large net profit. Best banks world level have the power to control operational efficiency. Realization of operational costs that are tailored to the workload of bank employees will support the bank in achieving high revenue. During these state-owned banks maintained a high level of interest, while banks playing the international level in low interest rates. Branches and sub-branches should control the state-owned banks to keep a high level of efficiency. Supposedly the number of assets owned are now branches and sub-branches able to achieve higher net income.

One of the policies to improve globally oriented intermediation function is to maximize the role of branches and the provision of high flexibility to the branch office as a branch office is a unit bank transactions that serve the community and provide a complete range of services banks compared with the unit. In addition , branch offices better understand the local potential compared to the regional office or headquarters . Branch office became the focus of the assessment is a state-owned bank branch offices located in West Java because of the industry's contribution to GDP in the region is relatively large compared to other provinces (BPS, 2013 ) that functions as an intermediary bank are more needed.

Attention to resources on a state-owned bank is not only tangible resources. Bontis (2000) termed a set of intangible resources such as intellectual capital. Strategic role of intellectual capital into intellectual capital when it is able to create value and performance. But in fact, the existing intellectual capital in state-owned banks have not been optimal. Another factor that is needed is knowledge management. High interest in the real sector led to the need for human resources of banks that have competence in each of the real sector increased rapidly provide opportunities for piracy and transfer of human resources from one bank to another. For this case the necessary management knowledge to retain and create as much as possible this important human resource.

In this study, the object covered are branches of banks led by the head of a branch given branch leaders better understand the local potential, more sensitivity to their resources, and the dynamics of the real sector in the work area . Bank with branches must have a high attention to the resources that exist at present and how these resources are used by paying more attention to the organization .

Writing this paper aims to present the results of research on whether the Knowledge Management influence on Intellectual Capital, whether the Knowledge Management and Intellectual Capital affect the performance branch office of Bank - owned banks in West Java , as well as whether the Intellectual Capital can

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mediate ( strengthen ) the effect of Knowledge Management to Bank Branch Office performance - owned banks in West Java .

The paper is organized into five sections. Part 1 contains preliminary background research conducted. Section 2 briefly describes the concept of the study variables and underlying theoretical framework of this research . Section 3 describes the methodology used in this study. Section 4 discusses the results of the study. Section 5 concludes and give advice and present research findings .

2. Theoretical Basis and Development Hypothesis

2.1. Knowledge Management

Banking services industry is currently faced with increasing competition , both nationally and regionally , in this case is East Asia. One that plays an important role is the use of knowledge management to strengthen the bank competition in terms of the utilization of knowledge as a strategic resource . Organizations need to develop an effective way to study the environment and implement strategic decisions that can take advantage of existing opportunities and face threats that occur . Developing an effective way can be achieved with the support of the use of information technology and knowledge management . In other words, organizations should study the weaknesses, strengths competitors, and learn how the desires and needs of consumers by improving the ability of innovation , the exploitation of technology, and to invest in knowledge and human resources processes based on knowledge.

It is realized that the knowledge was originally exist in each individual and to belong to the organization, the organization must facilitate, support, and stimulate individual knowledge into organizational knowledge . According to Nonaka et. Al. (2000 ), the process of knowledge creation in the organization is the process of making and strengthen existing knowledge created by individuals and crystallizes knowledge and connect it to the system of organizational knowledge . The process of knowledge creation is done through four models, namely the conversion of knowledge socialization , externalization, combination and internalization are known as a model SECI ( Nonaka and Takeuchi, 1995) in knowledge management.

A definition of KM (Knowledge Management) depends on how organizations create and utilize that knowledge. Ronald Maier (2007) defines knowledge management as a management function that is responsible for the selection, implementation, and evaluation of knowledge-oriented strategy on how the organization handles internal and external knowledge organization in order to improve organizational performance. Knowledge management is used to maximize organizational performance. In line with the above definition of knowledge management is a system or framework that integrates people, processes, and technology to achieve sustainable results by improving organizational performance through learning (Bacerra et.al., 2010). In practice, knowledge management is used as a tool to enhance the intellectual capital that is an intangible asset, which will ensure tangible assets in the form of financial success in the future (Pasher, 2011).

From the definition above , it can be concluded that knowledge management is a series of activities undertaken by the organization to maintain existing knowledge and creates new knowledge edge through the integration of people, processes , and

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technology to improve its performance by applying the model of socialization , ekternalisasi , combination and internalization ( SECI ) .

2.2. Intellectual Capital

Intellectual capital into superior resources to create economic wealth . Tangible assets such as property , plant and equipment continues to be an important factor in the production of both goods and services. However , their relative importance has declined in line with the importance of the intangible asset that is knowledge-based assets have increased role.

Edvinsson and Sullivan (1996 ) see intellectual capital as knowledge that can be converted into value . Stewart (1997 ) and Bontis (2000 ) refers to the intellectual capital as the aggregation of all the knowledge and competence of employees that enables organizations to achieve competitive advantage . On intellectual capital , there are three elements of intellectual capital that is inherent in human beings , attached to the organization , and are associated with external parties , such as the proposed Edvinsson and Sullivan (1996 ) , Sveiby (1997 ) and Stewart (1997 ) .

Intellectual capital inherent in humans is known as human capital (employee competencies) is the acquisition of knowledge, technology, and innovation by the human resources of the organization in its efforts to achieve the goal. Intellectual capital inherent in the organization known as structural capital (organizational capital or internal structures) is a company's ability to meet the company's routine process to produce optimal business performance. Intellectual capital inherent in the company's relationships with external parties known as the relational capital (customer capital) is the strength of the organization because it has a harmonious relationship with parties outside the company or the environmental resources of existing organizations. The third of these elements would work if each other are interconnected. In this study is the human capital includes the mastery of knowledge and skills about banking and finance needed today and the future. The structural capital include the availability of SOP (other than service quality SOP), IT availability, and quality of service. Lastly, the relational capital includes harmonious relationships with customers and potential customers.

2.3. Performance

Performance of the organization is the organization's ability to achieve its goal by using resources efficiently and effectively ( Daft , 2000; Hamon , 2003; Verboncu & Zalman , 2005.

With reference to the banking activity, the bank's performance results achieved in the bank operations, both regarding aspects of the collection and distribution of funds, revenue, operational efficiency, and customer loyalty. Raising (third-party funds) and the distribution of funds is the main activity of the bank as an institution that has the function of intermediation between owners and users of funds of funds. Besides banking efficiency is very important in explaining and interpreting the performance of the banks also profit which is a source of funding that contributes to the increase in bank capitalization. (Cocriş & Andries, 2009; Cocriş & Chirleşan 2007; Gruian 2010). Tramstop is customer loyalty

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demonstrated by the growing number of customers is a reflection of the achievements of the bank.

Specifically for branches and sub-branches state-owned banks, there are five indicators of performance to be achieved, namely third-party funds (demand deposits, time deposits, and savings), credit, income, operational efficiency and customer loyalty as measured by the least amount complaints and a growing number of customers.

2.4 .The Effect of Knowledge Management on Intellectual Capital

Knowledge management is a tool to enhance the intellectual capital which in turn ensure the success of future financial ( Pasher 2011 ) for knowledge management helps in planning, pengorganisasikan, and control the people, processes, and systems within the organization in order to ensure that the assets related knowledge can continue enhanced and effective use ( Rajesh et. al., 2011). Thus knowledge management has an influence on the intellectual capital (Seleim 2010 ; Nazem, 2012; David and Yusof, 2011).

Thus the concept and the results of their research can be concluded that in order to increase the intellectual capital that is effective and has the added value needed a knowledge management application that continuously.Based on the above , the research hypothesis that can be formulated as follows :H1 : Knowledge management influence on Intellectual Capital

2.5. The Effect of Capital Intellectual on Performance

Based on the research results Nazari (2010) mentioned that the three dimensions of intellectual capital (human, structural, and customer / relational) are interlinked, will have a positive influence on organizational performance. Highly competent employees (human capital) will be able to understand customer needs, and they will develop customer capital in maintaining their loyalty, and both human and customer capital will affect the structural capital, which in turn, has a positive influence on business performance. Furthermore, intellectual capital can be defined as the economic value of the three categories of intangible assets of organizations including human resources, organizational capital, and social capital to collectively contribute to improving organizational performance (Choudhury, 2010).

The three components of the intellectual capital that will provide significant influence on the performance of the organization as long as there is a connection between each component. Thus from the research results mentioned above appear to look the influence of intellectual capital variable to variable performance.Based on the above, the research hypothesis that can be formulated as follows:H2 : Intellectual Capital Affects the Performance

2.6. The Effect of Knowledge Management on Performance

Nonaka in his research in 1995 which uses a matrix SECI as a dimension of management knowledge found the success of many companies depends on their ability to create new organizational knowledge through the transformation of tacit

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and explicit knowledge at three levels, namely individuals, groups and organizations. Performance will increase through the learning organization with a system that integrates people, processes, and technology (Wang, 2011).

Rasula (2012) shows that knowledge management is a process that transforms individual knowledge into organizational knowledge. Acquisition, implementation, and protection of knowledge is significantly related to organizational performance (Mills and Smith (2011). The existence of a knowledge management led to the development of new ideas, new products, and also new ways of doing things that will ultimately leads to increased organizational performance (Mahapa, 2013). Thus, the results of several studies on the above it can be concluded that knowledge management will be able to improve the performance of an organization.Based on the above, the research hypothesis that can be formulated as follows:H3 : Knowledge Management Affects the Performance

2.7. The Effect of Knowledge Management on Performance Through Intellectual Capital

Andreou et al. (2007) showed that human capital, technological capital, and capital processes all have an indirect effect on the business performance in the high-tech industry. In addition, Wang and Chang (2005) found that human capital has an indirect effect on performance as well as research conducted by Andreou et al. (2007), Bontis (1998) and Chen et al. (2004). In addition, the organization's human resources and social capital has important implications for the performance (Bontis et al., 2000; Pennings et al., 1998). Intellectual capital to act as a mediator between the knowledge management process affects performance. Knowledge management process contributes positively to the performance, but with the inclusion of intellectual capital with its dimensions as a mediator to help improve performance. Thus, in order to improve performance, the bank needs to focus on the knowledge management process and recognized the importance of intellectual capital as a strategic organizational asset.Based on the above, the research hypothesis that can be formulated as follows:H4: Knowledge management influence on performance through intellectual capital.

The research paradigm based on the description of causal relationships between variables in the above can be seen in the figure below:

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Figure 2.1. Research Model

3. MethodologyThe research method used is descriptive method survey and explanatory survey method because this research is descriptive and verfikatif conducted through data collection in the field. Hypothesis testing carried out through Structural Equation Model ( SEM ) using LISREL software ( Hair et . Al ., 2006 ) . The population is all branches ( KC ) and sub-branches ( KCP ) commercial banks SOEs throughout West Java Province, measuring 609 pieces. The collected data , n = 154 pieces . Number of bank branches / sub-branches that will be sampled by using Slovin

formula with d = 10 % ,(n= NN d2+1

), resulting sample size is n = 85 pieces ,

whereas according to calculations suggested Hair et.al. the model in Figure 4.1 . n requires a minimum of 145 pieces. Thus the data obtained as many as 154 pieces sufficient for n greater than the minimum required by Slovin and Hair .

Data collection techniques will be conducted using three methods, namely field study through interviews , questionnaires ; the study of literature ; and scoring ordinal data (have now , 2006) . To test the validity of instumennya using correlation coefficient and reliability test using Cronbach alpha coefficient formula .

4. Data Analysis Result and Discussion

4.1. Data Analysis Result

4.1.1. Validity Test and Instrument Reability Research questionnaire consisting of 21 items were distributed to collect

data in this study have examined the validity and reliability which the statement has an index item validity0,30 and reability0,70.

4.1.2. Results Analysis of Structural Equation Modeling ( SEM )

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In the hypothesis testing approach the authors use Structural Equation Modeling ( SEM ) with the help of the program lisrel 8.8. Complete analysis of the results can be seen in Figure 4.1 .

Figure4.1. Grafik Analisis Full Model

4.1.3. Suitabilty Analysis Model (Goodness-of-Fit). Based on the assessment results of goodness of fit, the overall model

shown in Figure 4.1 above meet the criteria of model fit. It is characterized by the value of the calculation results meet the criteria of decent full model . Results of calculated value of chi -square test research model obtained at 64.25 under the chi - square table for 51 degrees of freedom at the 5% significance level of 68.669. 0.10062 probability value of greater than 0.05 . RMSEA value of 0.041 is less than 0.05 and the value of the value of NFI, CFI, RFI, GFI above 0.9. CMIN/DF at 1.2599 below 2.00. Thus, the model used in this study can be accepted.

4.1.4. Analysis of the Model Measurement

Table4.1.Results Loding Manifest Latent Variable Factors

ManifestLatent Variable

LodingFactor thitung R2 Variance

ErrorKnowledge ManagementSosialisation 0,705 11,155 0,4976 0,502 C-R = 0,852Externalisation 0,714 9,636 0,5096 0,409 V-E = 0,592Combination 0,837 10,970 0,7002 0,300Internalisation 0,813 11,898 0,6617 0,338Intellectual CapitalHuman capital 0,802 0,6430 0,357 C-R = 0,827Structural capital 0,849 10,626 0,7207 0,279 V-E = 0,616Relational capital 0,697 7,577 0,4851 0,515Bank PerformanceFunding 0,865 0,252 C-R = 0,911

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Lending 0,872 16,909 0,7481 0,240 V-E = 0,673Revenue 0,791 10,728 0,7601 0,375Operational Efficiency 0,768 12,720 0,6255 0,410Customer loyalty 0,800 12,226 0,6400 0,360

Source: Appendix Results Output 8.8 lisrel

4.1.5. Latent Variables Knowledge Management

Results in the above table shows Loding factor of manifest variables to a latent variable Knowledge Management has been well above the average of 0.5 loding factor ranging from 0.7 to 0.9. Tcount obtained for each variable manifest more than 1.96 so it can be said that the manifest variables used in measuring meaningful variables used Knowledge Management. Construct Reliability variable value above 0.7 Knowledge Management that is equal to 0.852. This value indicates the latent variables are formed has a relatively high level of reliability and indicators used in the latent variables have a good agreement. Extracted Variance calculation results for latent variables Knowledge Management at 0.592. Values obtained above the cut-off = 0.5 which shows the magnitude of the manifest variables that have been included in the construct is formed (latent variables) is relatively high, as a whole can be expressed constructs formed (latent variables) have precisely built from the indicator

4.1.6. Latent Variable intellectual capital

Results in the above table shows Loding factor of manifest variables to a latent variable Intellectual capital is already well above the average of 0.5 loding factor ranging from 0.6 to 0.9. Tcount obtained for each variable manifest more than 1.96 so it can be said that the manifest variables are used meaningful in measuring intellectual capital variables used. Construct Reliability variable value above 0.7 Intellectual capital is equal to 0.827. This value indicates the latent variables are formed has a relatively high level of reliability and indicators used in the latent variables have a good agreement. Extracted Variance calculation results for the latent variable intellectual capital amounted to 0.616. Values obtained above the cut-off = 0.5 which shows the magnitude of the manifest variables that have been included in the construct is formed (latent variables) is relatively high, as a whole can be expressed constructs formed (latent intellectual capital variable) is precisely constructed from indicators.

4.1.7. Latent Variable Bank Performance

Results in the above table shows Loding factor of manifest variables to a latent variable Bank performance has been well above the average of 0.5 loding factor ranging from 0.7 to 0.9. Tcount obtained for each variable manifest more than 1.96 so it can be said that the manifest variables used in measuring meaningful performance variable Bank used. Construct Reliability variable value above 0.7 Bank performance that is equal to 0.911. This value indicates the latent variables are formed has a relatively high level of reliability and indicators used in the latent

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variables have a good agreement. Extracted Variance calculation results for the latent variable Bank Performance of 0.673. Values obtained above the cut-off = 0.5 which shows the magnitude of the manifest variables that have been included in the construct is formed (latent variables) is relatively high, as a whole can be expressed constructs formed (latent variable Bank Performance) has been precisely constructed from indicators.

4.1.8. Research Hypothesis Testing

In this study, there are four hypotheses were tested, detailed hypothesis testing results are as follows :

Hypothesis Test 1

Based on a calculated result obtained tcount of 5.0811 is greater than 1.96 tkritis so that it can be concluded that the hypothesis 1 is accepted . Knowledge management influence on the intellectual capital of 0.5279 x 0.5279 x 100 % = 27.86%, which means increasing knowledge management will have an impact on the enhancement of intellectual capital is relatively large.

Hypothesis Test 2

Based on a calculated result obtained tcount of 2.7812 is greater than 1.96 tkritis so that it can be concluded that the second hypothesis is accepted . Path coefficient calculation results for the variable Knowledge Management ( X ) on the Performance Bank ( Z ) ( Pzx ) obtained at 0.2932 . From the calculations for variable Knowledge Management ( X ) on the Performance Bank ( Z ) ( Pzx ) obtained by the path coefficient ( Pzy ) at 0.2932 and the correlation variable with Performance Management Knowledge Bank at 0.4278 . 0.4278 = 0.1254 or 12.54 % , meaning that the growing Knowledge Management will have an impact on the increase in the Bank's performance relative big.Based on these data the influence of partial ( coefficient of determination ) Knowledge Management on the Performance of Bank of = 0.2932

Hypothesis Test 3

Based on the calculations, the value thitung 2.6200 is greater than 1.96 tkritis so that it can be concluded that the hypothesis is accepted. Path coefficient calculation results for Intellectual Capital variable (Y) on the Performance Bank (Z) (Pzy) obtained at 0.2730. The influence of the variable partial Intellectual Capital can be calculated by multiplying the value of Intellectual Capital path coefficients with variable correlation with the performance of Intellectual Capital Bank. 0.4373 = 0.1194 or 11.94%, which means that the better the intellectual capital will have an impact on the increase in performance Bank sizeable.From the calculations for Intellectual Capital variable (Y) on the Performance Bank (Z) (Pzy) obtained by the path coefficient (Pzy) at 0.2730 and the correlation with the performance variables of Intellectual Capital Bank at 0.4373. Based on these data the influence of partial (coefficient of determination) the performance of Intellectual Capital Bank to Bank Performance of = 0.2730

Hypothesis Test 4

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Based on the calculations, the value thitung 2.3288 is greater than 1.96 tkritis so that it can be concluded that the hypothesis is accepted . To test the effect of Knowledge Management on the Performance of the Bank and intellectual capital as an intervening variable is used Sobel test ( Kline , 2011: 164 ) , by multiplying the path coefficient of each - each relationship . Indirectly through Intellectual Capital , Knowledge Management gives the effect as 0.5279 × 0.2730 × 100 % = 14.14 % of the performance of the Bank , it means that the higher the Knowledge Management and mediated by the intellectual capital will have an impact on the increase in bank performance.

4.2. Discussion

4.2.1. The Effect of Knowledge management on Intellectual Capital

Based on the results obtained by t test answers that intellectual capital variables significant positive effect on the intellectual capital of the branch office of state-owned banks in West Java. The more effective implementation of knowledge management by the state bank branch office, the better the intellectual capital being owned by the state bank's branch offices. meaning knowledge creation process from starting the process of socialization, externalization, combination, up to the internalization to obtain the successful implementation of the tasks the employee has been done effectively by branch offices state-owned banks. Based on the average score obtained, two-dimensional variable dimensions of knowledge management is a combination of the highest (3.99) and internalization (4.00) as well as the results of its loading factor. Eksplitit combination process utilizes existing knowledge into explicit knowledge to implement new, more useful. This process is able to enhance the skills and productivity.

The process of internalization ( Internalization ), which changed the explicit knowledge as inspiration coming of tacit knowledge . Of the four existing processes, maybe this is all we have done . Other language is learning by doing . With reference manuals and books there, I started to work , and I find new experiences , new insights and new know-how that may be I got from the book .

Furthermore, with the support of knowledge management programmed the intellectual capital can be used optimally. The results are consistent with research conducted by previous studies conducted by Pasher (2011), Rajesh et.al (2011), Seleim (2010), Nazem (2012), David and Yusof, 2011) which showed that the positive effect of knowledge management significantly influence on intellectual capital.

Bank realized several benefits of knowledge management implementation. Knowledge management can be best practice, for example, ways of doing things in the most effective and most efficient. For example, the manager of the finance department can share their knowledge into tacit knowledge about how to handle large accounts. This knowledge can then be used to train a new financial manager that mastery of knowledge and skills increases. Other advantages

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include improving service to customers through knowledge of the strategy of the quality of service so that a harmonious relationship with your customers and potential customers can be sustained. Standard operating procedures were developed based on the results of knowledge management will be more effective in efficiently.

4.2.2. The Effect of Intellectual Capital on State-owned Bank Branch Offices’ Performance

Based on the results obtained by t test answers that intellectual capital variables significant positive effect on the performance of the branch office. This means that the great intellectual capital owned branch office of the state bank, the higher the performance of the branch office of the state bank. These findings are consistent with research conducted by previous studies conducted by Nazari (2010) and Choudury (2010) showed that the intellectual capital significant positive effect on the performance of a bank branch.

State banks have a branch office of intellectual capital that is pretty good. Seen from its human capital. HR in general have mastered the competencies (knowledge and skills) in banking and finance, and credit analysis. But still required the mastery of complex knowledge beyond the knowledge of banking and finance. In addition to knowledge of the product sold must also have knowledge of the resources in the environment, so for example when there are various regulations initiated by the government to the people, HR is able to capture the opportunities that might be used. Standard operating procedures that are owned by the branch office to serve customers and potential customers were already in accordance with the standards set by the central bank. Likewise with sophisticated IT already available in each branch office to support the course of each function of the organization. Service quality strategy was held in order to increase customer loyalty. The last capital of the intellectual capital owned branch office is established harmonious relations with customers and potential customers. With owned intellectual capital, the branch office is able to increase the growth of third-party funds, credit, income, and loyalty are also able to hit the high operational cost inefficiencies.

4.2.3. The Effect of Knowledge Management on State-owned Bank Branch Offices’ Performance

Based on the results obtained by t test answers that knowledge management variables significant positive effect on the performance of the branch office. This means that the effective implementation of knowledge management in state-owned bank branch office, the higher the performance of the branch office of the state bank. These findings are consistent with research conducted by previous studies carried out by (Wang (2011), Mils & Smith (2011), Rasula (2012), Mahapa (2013) shows that knowledge management significant positive effect on the performance of a bank branch.

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Knowledge management is a process that transforms individual knowledge into organizational knowledge. When knowledge is used to create innovative products that can generate revenue and profits or the current management strategy aligned with the business strategy, the performance of the organization will emerge.

Branch office of state-owned banks to facilitate the sharing of knowledge among employees so much to create new knowledge of such activities and storing new knowledge more systematic is to spread back through the proper method to members of the branch will increase the performance of branches of state banks in terms of achieving targets The short-term targets that support long-term performance of state-owned banks Centers. By branches of knowledge management more efficient in managing a wide range of knowledge in the various places and dimensions so that more pressure on the level of operating costs that should be incurred.

Knowledge management can affect the economy of scale and scope to improve the organization's ability to create and expand knowledge regarding the product, customer and managerial resources throughout the business process. Product design, expertise (expertise) can be shared throughout the business process, thereby reducing development costs, accelerate the development of new products and support rapid response to new market opportunities (new market) so it is more convincing and more customers to remain loyal.

4.2.4. The Role of Knowledge Management in Enhancing State-owned Bank Branch Offices’ Performance through Intellectual Capital

Based on the results obtained by t test answers that are more effective Knowledge Management and mediated by the intellectual capital will have an impact on the improvement of Bank Performance. That is, the role of intellectual capital to enlarge the influence of knowledge management influence tehadap performance. These findings are consistent with research conducted by previous studies conducted by Huang (2011).

Branches perform continuous knowledge creation makes it possible to have a good intellectual capital, ranging from the competence of its human resources continues to increase so as to increase the growth of third party funds, lending will ultimately increase revenue. Improved structural capital owned by banks as standard procedure Operational strategies will answer all their customers' needs so that the number of complaints became fewer and they will be more loyal. Strategy of increasing the quality of service that will make relationships with customers and potential customers will be more harmonious. The power of knowledge management enables customer self-service access to the so-called e-service or online help selt. With knowledge management IT capital of the bank is more developed. Because with the management knowledge bank knows the importance of IT to improve service for customers. Customers prefer the banks that can quickly and easily locate or provide information needed by the customers with accurate and they eventually will be happy and loyal to the bank that always provide any mereha needs in the field of banking. Besides the self-service can make

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companies reduce operating costs and streamline the organization in order to use the right resources in the organization more dynamic.

5. Conclusion

Based on the analysis and discussion as described, it can be concluded that : (1) The positive effect on the knowledge management performance. Then

intellectual capital also affect positively on the performance of state-owned bank branch offices in West Java. Furthermore, based on the model obtained test concluded that the level of state-owned bank branch office performance good or bad depends on the intellectual capital owned by state-owned bank branch office generated by effective implementation of knowledge management.

(2) The implementation of knowledge management will produce a good intellectual capital is human capital that is competent in the fields of finance and banking, credit analyst, project expert analyst. Then the resulting innovations will generate knowledge manjemen structural capital such as SOP, IT, and strategies for quality of care. Finally, a harmonious relationship between banks and customers / potential customers will become stronger thanks to the knowledge of the relationship created by the knowledge management.

(3) The best structural capital held by banks will be able to improve the performance of banks in the intermediation function and reduce the level of operational cost inefficiencies.Knowledge management is an important strategy in the effort to increase the company's value.

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