Dissertation proposal

An analysis of the effects of Board structure,

functions and processes on company
performance: A case of Zimbabwe’s
parastatals and state enterprises.
Background of the Study
• Corporate governance has attracted a great deal of attention since the
mid-1980s when concerns about the way companies were controlled
and held accountable were overshadowed by their commercial success
Crowth and Seifi (2011).
• The pervasiveness of financial scandals in Zimbabwe has revealed a lot
of concerns on corporate governance in both the private and public
sectors.
• Several companies have faced problems associated with corporate
governance. Recently companies such as Zimbabwe Broadcasting
Holdings (ZBC), Air Zimbabwe, Premier Service Medical Aid Society
(PSMAS) and Netone have faced a number of challenges ranging from
mis-use of funds, fraudulent procurement procedures, corruption, and
abuse of office. The major cause of these corporate scandals in
Zimbabwe is centred mainly on poor corporate governance Sifile et al
(2004). This is largely attributed to board functions processes and
structure
• Zimbabwe’s corporate governance like other emerging markets is based more on the
board of directors than the market.
• In Zimbabwe, state enterprises and parastatals board of directors are central to the
corporate governance system with ultimate accountability and responsibility for the
organisation’s performance Frederick (2011).
• The board of directors is largely considered as the cornerstone of the company’s
corporate governance structure with the primary role of the company’s activities to
the interests of the stakeholders.
• The board of directors is seen as the most important corporate governance
mechanism that monitors and advises the company’s top management in performing
their responsibility to protect shareholder interests Sohl et al (2015).
• There has been increased talk on the need for sound corporate governance in these
public institutions with a lot of workshops being held to discuss issues on sound
corporate governance for development. In light of the growing need of sound and
effective corporate governance models, procedures and processes, this research will
therefore investigate the impact of board structure, functions and processes on the
performance of state enterprises and parastatals in Zimbabwe while providing and
overview of the current state of corporate governance in Zimbabwe
 Statement of the Problem
• State enterprises and parastatals in Zimbabwe have been hard hit by
challenges emanating from poor corporate governance structures
and processes.
• Problems include abuse of office, misuse of funds, inappropriate
procurement procedures, fraud and corruption.
• These have had a negative impact on service delivery,
organisational performance and national economic development.
Therefore there is strong need for accountability and clear
governance procedures for the good of the Zimbabwean public
which is a major stakeholder in the Zimbabwean state enterprises
and parastatals.
• When all these misconducts, problems and challenges are taking
place within an organisation the functions of the board are
questioned
 Purpose of the study
• The study aims at developing a conceptual
framework to investigate the relationship between
board structure, functions and processes on
organisational performance in state enterprises
and parastatals of Zimbabwe. The study will also
contribute to the corporate governance literature
in Zimbabwe
 Research objectives
1. To determine the levels of compliance with corporate
governance principles by Zimbabwean parastatals and state
enterprises
2. To determine the relationship between corporate governance
and organisational performance
3. To identify and examine the key factors that lead to effective
board of directors which contributes towards better
performance
4. To ascertain the integration of board of directors functions,
responsibilities and processes in the implementation of
policies
Research questions
1. What are the reasons for increased corporate governance
problems in state enterprises and parastatals in Zimbabwe?
2. What is the importance of the code of corporate
governance in a public institution?
3. What is the relationship between corporate governance
and organisational performance?
4. How does the board structure, functions and processes
affect organisational performance?
5. What ids the role of the board of directors in the
operations of an organisation?
Significance of the research
• The research will fill in an essential gap by contributing to the
knowledge on the performance and effectiveness of board of
directors. It will also contribute to an increased understanding of the
board dynamics while giving important insights into issues to be
considered when selecting parastatals and state enterprises boards.
• It will also shade more light on how the board can engage and
manage policy implementation by organisations and company level
and ensure adherence, transparency and accountability.
• Although there are lots of researches on the effects of board
structure on organisational performance, this study will introduce an
additional dimension of board functions and processes in the
corporate governance and performance framework
Assumptions

1. Good corporate governance is key to better

organisational performance
2. All state enterprises and parastatals are
governed by a board of directors
3. The management in parastatals and state
enterprises are knowledgeable about the
principles of good corporate governance and
its importance in organisational performance
Hypothesis

• H1a: Corporate governance practices have a

stronger influence on organisational
performance.
Delimitations of the study
• The study will be limited to state owned
enterprises focusing mainly on their head
offices domiciled in Harare
• Focus will ne on Netone, Zbc and Zupco
Limitations of the study

• The research will only be limited to state

enterprises and parastatals leaving the private
sector which is important in development.
• Management in state enterprises may not
reveal some confidential information that is of
importance to this research
 Literature Review
 
• The need to enhance corporate governance has increased in many developed and developing
countries over the past few decades (Brown & Caylor, 2006). Therefore, this research reviews the
development of corporate governance practice around the world. According Sir Adrian Cadbury
(1999):, “Corporate governance is concerned with holding the balance between economic and
social goals and between individual and communal goals.....the aim is to align as nearly as possible
the interests of individuals, corporations and society.” Sir Cadbury’s definition suits both private
and state owned enterprises. Despite the trend towards privatisation, state owned enterprises are
still major players in nations’ economic activities World Bank (2014). For the foreseeable future,
they will continue to deliver critical products and services
• The same view is supported by Nevondwe, Odeku & Tshoose (2014) who report that the
importance of governance to SOE has become very important since these organizations have
tremendous impact on the economies in which they operate. This means that the practice of proper
corporate governance issues should not be confined to the private sector.
• Nevondwe, et al (2014) argues that the effectiveness and accountability of the SOE could be
improved significantly if the principles of corporate governance were applied correctly. This
means that it is more than the existence of the code but how it is implemented OECD (2014).
• Chavhunduka and Sikwila 2015 asserts that , the inclusion of corporate governance in SOE is
expected to curb the tendency by public servants to use their positions for personal gains, at the
same time, assisting them to pursue the achievement of the vision and mission of their
organizations
 Literature review Contd
• This chapter will trace the development of corporate governance through a review of literature in the
following areas:
•  
• Corporate Governance
• Definitions of Corporate Governance
• Principles for Corporate Governance
• Benefits of Corporate Governance
• Theoretical Perspective of Corporate Governance
• Agency Theory
• Stewardship Theory
• Stakeholder Theory
• Resource Dependency Theory
• Social Contract Theory
• Legitimacy Theory
• Corporate governance in selected developed countries
• Corporate governance from the Asian perspective
• Corporate governance in the African perspective
• Corporate governance in Zimbabwe
• Board Structure
• Board Leadership Structure
• Board Composition
 Methodology
• Research Design
• The research design will be both quantitative and qualitative
(Johnson 20). Quantitative aspects will consists of the
numerical aspects of the research, while qualitative aspects of
the research will aim at exploring stakeholder perceptions
towards the performance of different SOEs
• Sampling
• For the purpose of this study random probability sampling is
selected. A minimum sample of 100 respondents will be
selected considering the different stakeholders in SOEs this
will include officials from parent ministries, past and existing
boards, directors, company secretaries employees and selected
parliamentarians as stakeholders.
 
Data Collection
• For the purpose of this research, and in order to achieve the
objectives will be collected and will be used both primary and
secondary data. The secondary data will contribute towards the
formation of background information, needed by both the
researcher in order to build constructively the project and the
reader to comprehend more thoroughly the survey outcome.
• Primary data will be collected in two ways. Firstly, a
questionnaire survey will be conducted with tourists visiting the
area. Secondly, interviews will be also carried out with providers
of accommodation services and members of the local authority

Data Analysis
• The data collected from primary and secondary sources will be
analysed by using appropriate statistical tools to approve or
disapprove the hypothesis.