Ketut Tanti Kustina

This study explores rural banks’ efforts to leverage intangible assets, particularly organizational culture, to achieve financial sustainability. It examines how organizational culture influences service innovation and how social capital strengthens these relationships to support financial sustainability. The study utilized a quantitative research design targeting a population of 132 rural banks in Bali Province, Indonesia. Using a non-probability sampling technique, specifically saturation sampling, 131 valid samples were analyzed after excluding one due to unreliable data. Data were collected through survey questionnaires and analyzed using path analysis. The results indicate that organizational culture positively influences financial sustainability (path coefficient = 0.104, p = 0.027) and service innovation (path coefficient = 0.141, p = 0.015). Service innovation significantly enhances financial sustainability (path coefficient = 0.741, p = 0.000). Moreover, social capital strengthens the relationship between organizational culture and service innovation (interaction term coefficient = 0.167, p = 0.013) and contributes positively to financial sustainability (interaction term coefficient = 0.124, p = 0.019). However, social capital negatively impacts financial sustainability (path coefficient = –0.51, p = 0.000) and service innovation (path coefficient = –0.688, p = 0.000). These findings underscore the importance of fostering a robust organizational culture and prioritizing service innovation to overcome resource constraints and achieve financial sustainability. The study aligns with contingency theory, highlighting that optimal actions depend on the specific internal and external conditions faced by rural banks.