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Jurnal Ekonomi Malaysia

57 (3) 2023 181 – 194

Energy Efficient Retrofits using Transaction Cost Theory: Evidence from Indonesia

Faculty of Management
Business School of Management
Bina Nusantara University (BINUS)
Jalan Kebon Jeruk Raya No. 27
Jakarta Barat 11530, INDONESIA.

Faculty of Economics and Business
University of Pancasila
Jalan Srengseng Sawah, Pasar Minggu
Jakarta 12640, INDONESIA.


The study aimed to analyze the factors that influence the energy-efficient retrofits decisions using transaction cost theory. The research was conducted from December 2020 to July 2021, involving 105 samples that comprise of Indonesian building owners, operations managers, and Chief of Operations. The data was analysed using Partial Least Squares model. The key findings were that uncertainty and asset specificity, rather than transaction costs, were the main factors influencing building owner and occupants’ decisions to pursue energy efficiency retrofits. This highlights the need to address service guarantees, specialized assets, and uncertainty to facilitate adoption. This study contributes to the transaction costs of economics in green retrofitting financing models. Therefore, this research provides framework for developing ideas in implementing green retrofitting. The study suggests retrofit providers should prioritize reducing uncertainty and highlighting asset specificities, such as solid service guarantees, branding, expertise, and equipment quality, to drive greater adoption of energy-efficient retrofits. This research offers practical insights into owner-occupant motivations, benefiting the building industry in improving marketing, partnerships, contracts, and client relationships to boost retrofit adoption. Overall, the findings support the growth of retrofitting and related sectors by demonstrating their viability and emphasizing the key factors that influence adoption.


asset specificities; energy efficiency initiative; partial least squares; retrofitting; Transaction cost economics; uncertainty

JEL Codes

G4, L2, L8, M2, N6, Q3


Export Bibliography

Nasip, I., & Sudarmaji, E. (2023). Energy Efficient Retrofits using Transaction Cost Theory: Evidence from Indonesia. Jurnal Ekonomi Malaysia, 57(3), 181–194.

  title={Energy Efficient Retrofits using Transaction Cost Theory: Evidence from Indonesia},
  author={Nasip, Ismiriati and Sudarmaji, Eka},
  journal={Jurnal Ekonomi Malaysia},


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