Drivers of organisational performance : a state owned enterprise perspective

Mbo, Mbako (2017-03)

Thesis (DAdmin)--Stellenbosch University, 2017.

Thesis

ENGLISH SUMMARY : This study seeks to analyse the historical performance of State Owned Enterprises (SOEs) in sub-Saharan Africa, and to investigate and explain factors that combine to influence SOE performance with the aim of proposing an SOE-specific administrative framework. The thesis is structured as a collection of four essays. In the first essay, performance trends of 23 SOEs selected from 10 countries across sub- Saharan Africa are analysed. The analysis covers a 12-year period from 2001 to 2012, performing comparisons across six different industries. From the results, the telecommunications industry comes out as the best performer compared to all other sectors in the study, with an above average financial and productivity performance. This result is attributable to the competition induced efficiencies common in this sector. The high levels of independent regulation of the industry across Africa are credited for reduced direct political interference which is often blamed for diminished productivity and general performance in other SOE dominated industries. Conversely, the power and postal industries are below average performers when performance is measured in both financial and productivity terms. These two industries in particular have often been identified as being burdened with diverse stakeholder needs and massive political pressures, both with a noticeable negative impact on firm performance. The second essay examines the empirical evidence on factors that influence performance of State Owned Enterprises. With a focus on power utilities, the essay investigates how such several factors interact with each other to influence ultimate performance. The study takes liquidity, board strength, extent of stakeholder representation on the board of directors and government’s involvement in pricing as proxy variables for resource-based, agency, stakeholder and public choice theories respectively. Using performance as the dependent variable, the study variables are modelled in a regression model empirically estimated using a linear mixed model within the framework of longitudinal data analysis. The analysis reflect that good SOE performance could be explained in terms of the agency and resource-based theories, with a positive correlation between good performance and strong boards as well as good liquidity profiles. A wider stakeholder representation on SOE boards correlates negatively with performance. Similarly, the higher the level of government involvement in the tariff setting process, the weaker the performance results. Based on the results, the essay concludes that the performance of SOEs is underpinned by a plethora of organisational issues: agency, public policy, stakeholder and resource-based issues. The third essay selects an SOE, the Botswana Power Corporation which has gone through checkered performance trends over a 15-year period up to 2014. Using a case analysis approach, the essay takes a broader view in interrogating and explaining how several factors interact with each other to influence performance, focusing mainly on governance, resource availability, and political and stakeholder interactions. It does so in a context of organisational theories which, when applied to an SOE setting tend to display some degree of tension amongst each other. The essay concludes that much of the good organisational performance is explained by tenets underpinning the agency, stewardship and resource-based theories while a blanket pursuit of the stakeholder theory undermined the sustainable performance of BPC. A number of factors with an overriding and negative effect on BPC’s performance are consistent with postulations based on the public choice theory, but the essay exposes the lack of rigour in the generalised views which suggest that politicians always act in self-interest. In the fourth and final essay, the Botswana Telecommunications Corporation, being an SOE that has maintained a long history of impressive performance is chosen for a case analysis. The analysis covers an 18-year period to 2012 and also focuses on governance, resource availability, political and stakeholder interactions, all considered in the context of organisational theories. The findings support the widely held view that agency and resource-based theories explain good performance, but they challenge the popular view that political influence is always driven by self-interests. A concept of positive public choice, under which such influence is driven by stakeholder interests and sustainability emerges. The case reveals that a selective approach to stakeholders defined how BTC crafted its good performance in a politically conducive environment. In summary, the following points emerge from the four essays: 1) African SOEs in the telecommunications industry perform better than those in other industries, typically due to competition induced efficiencies, whilst those in the power and postal sectors display below average performance; 2) the agency and resource-based theories can best explain good performance in SOEs, whilst slow to negative performance can be explained in terms of the public choice theory; 3) an indiscriminate pursuit of stakeholder interest contributes to poor SOE performance, and with this there emerges a counterproductive external influence best explained in terms of both the stakeholder and public choice theories.

AFRIKAANSE OPSOMMING : Geen opsomming beskikbaar.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/100877
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