Vol. 5, No. 8, August 2024

E-ISSN: 2723-6692

P-ISSN: 2723-6595

http://jiss.publikasiindonesia.id/

Jurnal Indonesia Sosial Sains, Vol. 5, No. 8, August 2024 2131

KEYWORDS

ABSTRACT

Social impact; Corporate

Profitability; Strategy

This research examines the relationship between social impact and

corporate profitability in the context of GoTo, Indonesia's largest

technology conglomerate. This study analyzes GoTo's

transformation from a simple ojek service to a comprehensive

digital ecosystem, as well as its role during the COVID-19 pandemic.

Using quantitative and qualitative mixed methods, this study

investigates changes in consumer behavior, GoTo's economic

contributions, and post-IPO challenges. Key findings show a

significant increase in GoTo's service usage during the pandemic,

with annual contributions reaching 1.6% of Indonesia's GDP.

However, GoTo's pursuit of profitability post-IPO faces market

volatility and regulatory scrutiny, particularly regarding driver-

partner welfare. This research highlights the complexity of

balancing social missions with the demands of profitability in the gig

economy, emphasizing the importance of a holistic approach to

sustainable growth that considers the interests of all stakeholders.

Attribution-ShareAlike 4.0 International (CC BY-SA 4.0)

1. Introduction

GoTo began its activities as an Ojek-based transport service company in 2010. In that period,

GoTo, which was then still known as GoJek, started its activities from 20 ojek and 1 call Centre only

(Almunawar & Anshari, 2022). Only after 5 years did the Gojek application be completed, and an

increase in orders was received to 10,000 orders every day. This success also made them successful

in getting Series funding. It didn't take long; Gojek managed to become a Unicorn company a year

later (Cho & Anindya, 2021). In 2021, Gojek made a big breakthrough by merging with the largest e-

commerce company in Indonesia, Tokopedia. The merger of these two companies created the largest

technology company in Indonesia and ensured a "go-to" ecosystem for various daily needs. Today,

GoTo is a multi-service company with products ranging from transportation, logistics, financing,

dining and shopping. The company is also listed on the stock exchange and is one of the largest-value

companies in Indonesia (Foss & Saebi, 2017).

Harmonizing Social Impact and Corporate Success: The Nexus

of GOTO's Contribution to Society and Profitability

Dian Alanudin, Muhammad Miqdad Robbani

Institut Teknologi dan Bisnis, Jakarta, Indonesia

Email: dian.alanudin@jbs.ac.id, miqdad.rabbani@jbs.ac.id

Correspondence: dian.alanudin@jbs.ac.id

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Pandemic Blessings for Gojek and Tokopedia

On 2 March 2020, the Indonesian government announced the first case of Covid-19. It did not

take long for Covid-19 to spread in Indonesia and become a pandemic. At its peak on 31 March 2020,

the Indonesian government declared the implementation of Large-Scale Social Restrictions (PSBB).

This condition then makes the Indonesian people stay home and cannot do activities outside the

home. This condition indirectly increases the potential for digital transactions from the Indonesian

people. Based on a study from the Demographic Institute of the Faculty of Economics and Business,

University of Indonesia, the annual economic contribution of the GoTo ecosystem reached 1.6% of

Indonesia's GDP. This contribution increased from the previous year by 60% and reached 249 trillion

rupiah. In the same study, GoTo said that there were changes in consumption patterns during the

pandemic. GoFood customers, for example, experienced a 65% increase compared to before the

pandemic. Also, 36% of consumers also stated that they used online delivery services more often

(Belk, 2014). On the payment side, GoTo users experienced a 68% increase in the use of GoPay. The

increase also occurred in the use of the PayLater feature with a magnitude of 57% (Goto, 2023).

Figure 1 Driver Partner Support Programme from Consumers

Source: Gojek.com (2020)

Not only does GoTo encourage an increase in the number of application users, but it also

encourages an increase in the welfare of its partners, especially drivers. Based on the same study's

results, more than half of consumers (60%) assisted Gojek partners during the pandemic through

several ways, such as the money tips feature, GoFood order overrides, and the driver treat feature. In

addition to these features, some customers stated they provided cash, food and necessities for driver-

partners.

IPO and GoTo Profitability Demands

On 11 April 2022, GoTo was listed on the main board of the Indonesia Stock Exchange for the

first time. The listing followed an offering period from 1 to 7 April 2022. GoTo set the IPO price at IDR

338 per share, offering 46.7 billion new series A shares. Through this sale, GoTo aimed to raise IDR

15.8 trillion. This IPO was reported as the third-largest in Asia and the fifth-largest globally in 2022.

After the IPO, GoTo's stock faced challenges. On its first trading day, GoTo's shares rallied by 18%,

reaching Rp 400 per share. However, on 12 April, GoTo stock entered the red zone, falling by 4.71%.

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The downward trend continued, with GoTo shares touching Rp 312 and Rp 300 within one month

after the IPO.

In the following month, GoTo shares again experienced pressure where the price had decreased

to Rp 190. Luckily on 25 May, the price increased again to Rp 304. The stock touched Rp 412 in the

middle of June. But the latest challenge came at the end of November. In that period, GoTo shares

went through a lockup period. Lockup is a condition where shareholders from the pre-IPO period

cannot sell their shares. The lock-up period is implemented to prevent pre-IPO shareholders from

selling their shares and causing the price to fall. In addition, selling shares from pre-IPO shareholders

can make the market perceive that the shares are not profitable enough. During this period, GoTo

shares fell and experienced an auto-reject bottom (ARB) during the week. An auto-reject bottom

(ARB) is a condition where the stock experiences such an extreme decline that the exchange closes

trading for the stock. This is done to prevent market panic over the share price. GoTo itself

experienced a price drop to Rp 107 per share. The peak of GoTo shares had touched Rp 82 per share

(CNBC, 2022).

Figure 2. GoTo Share Price Movement

Source: Trandingview (2023)

After almost two weeks, GoTo stock slowly returned to the upside. However, GoTo stock never

returned to the same level as before. By the end of 2022, GoTo stock had fallen 74.26% from its initial

IPO price, with such a high price drop. GoTo stock has lost its market capitalization from IDR 361.23

trillion to only IDR 103.04 trillion.

Chasing Company Profitability After IPO

In response to the ARB volumes in early December 2022, the IDX invited GoTo executives to

conduct an incidental public expose. Public exposure is an activity where a company announces the

current condition of the company in order to provide confidence to shareholders. The IDX conducted

this public exposure to ease the market's panic over the potential of the stock price decline that has

occurred many times. At the public expose, Patrick Cao, Group President of GoTo, shared some of the

company's priorities. In the public expose document distributed, there are two main commitments

from the GoTo company, namely quality business growth and driving overall efficiency. Both aim to

increase the company's profitability. In an official statement, GoTo President Director Andre Soelistyo

stated his commitment to record positive EBITDA in the fourth quarter of 2023. This commitment

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can be seen in GoTo's financial statements in the first quarter of 2023. Overall, there was a 67%

growth in adjusted EBITDA from last year to IDR -1.6 trillion or -1.1% of gross transaction value.

When looking at gross revenue from GoTo in the quarter this year it reached Rp 5.98 trillion,

up 14% yoy from Rp 5.23 trillion. When viewed in more detail, gross revenue for on-demand services

through Gojek rose 12% to Rp 2.99 trillion. E-commerce gross revenue via Tokopedia rose 21% to Rp

2.26 trillion from Rp 1.87 trillion, and fintech revenue via GoTo Financial (GTF) shot up 25% to Rp

424 billion from Rp 338 billion. In addition to increasing sales, GoTo reduced its net loss by 41% in

the first quarter of 2023 to Rp 3.89 trillion from the net loss for the same period in 2022, worth Rp

6.61 trillion.

Figure 3. Contribution Margin and EBITDA of GoTo in the First Quarter of 2023

Source: GoTo (2023)

To increase profitability, GoTo increases the take rate of each product service provided. The

take rate is the service fee charged by the company to consumers who use the service. As of early

2020, GoTo's on-demand service, Gojek, has a take rate of 20.8% for each service provided.

Meanwhile, Tokopedia has a take rate of 4% for each service provided.

Profitability Trade-Off: Social Mission

To tidy up the issue of online transportation in Indonesia, the Ministry of Transportation of the

Republic of Indonesia also made regulations regarding discounted tariffs from applicator companies

to drivers (Mahalana et al., 2021). This regulation is then contained in the Decree of the Minister of

Transportation No. KP 667/2022 concerning Guidelines for Calculating the Cost of Services for the

Use of Motorbikes Used for the Benefit of the Public by Applications (Delgado Jiménez et al., 2022).

The regulation confirms that the commission fee that application providers can take is 15%. However,

the Ministry of Transportation revised the regulation through the Minister of Transportation Decree

No. 1001/2022. According to the regulations, the deduction allowed by app companies for drivers is

20%. This is set to accommodate the needs of service provider companies such as GoTo. Even so, the

Chairperson of the Indonesian Transport Workers Union (SPAI), Lily Pujiati, said that there are still

many violations of the provisions of the limit on tariff deductions made by application owners.

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"Even though it has been set at a maximum of 20%, the application still violates this provision

by making deductions to Ojol drivers of more than 20%. The cuts that burden Jol drivers are in

the range of 22%- 40% in each order."

Chairman of the Online Ojek Driver Association Garda Indonesia, Igun Wicaksono, explained

that the large deductions given by the application provider company have reduced the interest of the

drivers. This does not follow the conditions of the job when it first appeared in 2010 to 2015 when

the income of online Ojek drivers could reach Rp 10 million. In addition to implementing higher

tariffs, massive recruitment conducted by online Ojek companies in 2016 also contributed to the

declining interest of the drivers. They get fewer orders because they have to compete with many other

drivers. Igun also said that this can be caused by the mindset of companies that are focused on profit

and are not concerned with the fate of their drivers. In the news quoted from CNBC Indonesia, GoTo's

President Director, Andre Soelistyo, explained that 50% of Gojek's active drivers do work as part-

timers. According to him, Gojek focuses on providing as many job opportunities as possible, not

permanent jobs.

2. Materials and Methods

This research method employs both quantitative and qualitative approaches. The quantitative

approach involves collecting data to measure changes in service usage and its impact on the economy

and profitability of GoTo. In contrast, the qualitative approach aims to gain deep insights from GoTo’s

consumers and employees regarding their experiences and adaptations during the pandemic.

Primary data is obtained through surveys of GoTo service users and in-depth interviews with GoTo

employees. In contrast, secondary data is sourced from study reports by the Demographic Institute

of the Faculty of Economics and Business, University of Indonesia, GoTo’s annual reports, media

publications, and the company’s financial data. The research population includes users of GoTo

services in Indonesia (GoRide, GoCar, GoFood, GoPay), with a sample of 500 users randomly selected

for the quantitative survey and 20 users and 10 employees for in-depth interviews. Data collection

techniques include a quantitative survey through online questionnaires to measure service usage

during the pandemic, semi-structured interviews with users and employees to gain deep insights into

their experiences, and secondary data analysis from related reports and publications to understand

GoTo's economic context and impact during the pandemic.

3. Result and Discussion

Results

The COVID-19 pandemic presented unprecedented challenges globally, yet for GoTo, formerly

GoJek, it also catalyzed significant shifts in consumer behaviour and digital adoption in Indonesia

(Soesilo & Rahman, 2022). The onset of nationwide lockdowns in March 2020 propelled a surge in

digital transactions, transforming GoTo's ecosystem and amplifying its economic contribution. A

study by the Demographic Institute of the Faculty of Economics and Business, University of Indonesia,

revealed a substantial uptick in GoTo's economic impact, with the platform's annual contribution

reaching 1.6% of Indonesia's GDP, a 60% increase from the previous year.

Notably, GoFood experienced a 65% surge in usage, reflecting heightened reliance on online

delivery services. In comparison, GoPay witnessed a 68% increase in utilization, underscoring the

pivotal role of digital payments amidst the pandemic. These shifts in consumer behaviour indicate a

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growing dependence on digital platforms and highlight the essential nature of GoTo's services during

times of crisis.

GoTo's journey towards profitability post-IPO has been marked by volatility and market

challenges. Despite an impressive debut on the Indonesia Stock Exchange, GoTo's stock faced

subsequent fluctuations, experiencing significant share price and market capitalization declines. The

company's commitment to enhancing profitability has been underscored by initiatives to drive

overall efficiency and quality business growth. In public exposure, GoTo executives emphasized

priorities to record positive EBITDA, signalling a strategic focus on financial performance and

shareholder value creation agenda (Demirkan & Spohrer, 2014; Heinze et al., 2016).

GoTo's pursuit of profitability has been accompanied by scrutiny over its social impact and

treatment of partners, particularly ojek drivers. Regulatory interventions to curb tariff deductions

underscore broader concerns over fair compensation and job security for gig workers. Despite efforts

to accommodate drivers through revised regulations, reports of excessive deductions and declining

earnings highlight ongoing challenges in balancing profitability with social responsibility (Chin & Liu,

2018).

GoTo's emphasis on providing consumption job consumption opportunities, albeit

predominantly as part-time roles, underscores tensions between profit maximization and worker

welfare in the gig economy landscape. The company's initiatives to drive efficiency and quality growth

are essential for long-term sustainability. However, it must also address the welfare of its gig workers

to ensure a balanced approach to profitability and social responsibility.

Discussion

Conclusion: Harmonizing Social Impact and Corporate Success

The COVID-19 pandemic presented unprecedented challenges globally, yet for GoTo, formerly

GoJek, it also catalyzed significant shifts in consumer behaviour and digital adoption in Indonesia

(Zhang & Hayashi, 2020). The onset of nationwide lockdowns in March 2020 propelled a surge in

digital transactions, transforming GoTo's ecosystem and amplifying its economic contribution. A

study by the Demographic Institute of the Faculty of Economics and Business, University of Indonesia,

revealed a substantial uptick in GoTo's economic impact, with the platform's annual contribution

reaching 1.6% of Indonesia's GDP, a 60% increase from the previous year. Notably, GoFood

experienced a 65% surge in usage, reflecting heightened reliance on online delivery services, while

GoPay witnessed a 68% increase in utilization, underscoring the pivotal role of digital payments

amidst the pandemic. GoTo's journey towards profitability post-IPO has been marked by volatility

and market challenges. Despite an impressive debut on the Indonesia Stock Exchange, GoTo's stock

faced subsequent fluctuations, experiencing significant declines in share price and market

capitalization. The company's commitment to enhancing profitability has been underscored by

initiatives to drive overall efficiency and quality business growth. In a public expose, GoTo executives

emphasized priorities aimed at recording positive EBITDA, signaling a strategic focus on financial

performance and shareholder value creation (Hill et al., 2020). GoTo's pursuit of profitability has been

accompanied by scrutiny over its social impact and treatment of partners, particularly ojek drivers.

Regulatory interventions aimed at curbing tariff deductions underscore broader concerns over fair

compensation and job security for gig workers. Despite efforts to accommodate drivers through

revised regulations, reports of excessive deductions and declining earnings highlight ongoing

challenges in balancing profitability with social responsibility. GoTo's emphasis on providing job

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Jurnal Indonesia Sosial Sains, Vol. 5, No. 8, August 2024 2137

opportunities, albeit predominantly as part-time roles, underscores tensions between profit

maximization and worker welfare in the gig economy landscape.

4. Conclusion

GoTo's journey exemplifies the delicate balance between social impact and profitability in the

tech sector. While the company played a crucial role in Indonesia's digital transformation during the

COVID-19 pandemic, it now faces challenges reconciling profit goals with social responsibilities. As

GoTo evolves, addressing fair compensation, job security, and regulatory compliance for gig workers

will be vital for sustainable growth. The company must skillfully navigate these challenges to maintain

its leadership in Indonesia's digital economy while upholding its social mission and ensuring long-

term viability.

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