Integrated Strategic Governance and Financial Pathways for Mitigating Stranded Assets

A Strategic Management Framework for Sustainable Corporate Performance in Indonesia's Electricity Utility Industry

Abstract

The global energy transition has significantly increased the risk of stranded assets within the electricity utility sector, requiring organizations to redesign their governance structures, strategic capabilities, and financing mechanisms to maintain sustainable corporate performance. Although previous studies have separately examined strategic governance, sustainable finance, and stranded assets, limited research has integrated these dimensions into a comprehensive strategic management framework. This study aims to develop and empirically examine an integrated model explaining how strategic governance enhances organizational performance sustainability through the mediating roles of strategic capabilities and financial pathways in mitigating stranded asset risks during the energy transition. This study employed a quantitative explanatory research design using a structured survey of managers and strategic decision-makers from Indonesian electricity generation companies. Data were collected using a five-point Likert-scale questionnaire and analyzed through path analysis to examine both direct and indirect relationships among Strategic Governance, Strategic Capabilities, Financial Pathways, and Organizational Performance Sustainability. The proposed model demonstrates that strategic governance strengthens organizational strategic capabilities, which subsequently improve the effectiveness of financial pathways supporting renewable energy investment and stranded asset mitigation. Financial pathways emerge as a critical mechanism linking strategic capabilities to long-term organizational performance sustainability. The findings further indicate that strategic governance exerts both direct and indirect influences on sustainable corporate performance through its interactions with strategic capabilities and financial pathways, emphasizing the importance of an integrated strategic management approach during the decarbonization process. This study focuses on electricity generation companies in Indonesia; therefore, the generalizability of the findings to other industries and countries should be interpreted cautiously. Future research is encouraged to validate the proposed framework across different energy sectors, institutional environments, and regulatory contexts while incorporating additional variables such as ESG performance, digital transformation, and enterprise risk management. The findings provide strategic guidance for electricity utility executives and policymakers in strengthening governance systems, developing adaptive organizational capabilities, and designing sustainable financing strategies that reduce stranded asset exposure while supporting long-term organizational resilience throughout the energy transition. This study contributes to the strategic management literature by integrating Strategic Governance, Strategic Capabilities, Financial Pathways, and Organizational Performance Sustainability into a unified framework for stranded asset mitigation. The proposed model extends previous research by positioning sustainable finance as a strategic mechanism through which governance and organizational capabilities jointly enhance corporate sustainability in the decarbonization era.