Assessing Governance Structures in State-owned Enterprises using Transaction Cost Economics’ Dimensionalisation

Abstract

This paper illustrates how Transaction Cost Economics’ (TCE) dimensionalisation, a governance structure comparative analysis tool, may be used in assessing corporate governance structures. To illustrate, this paper assesses the governance structures of state-owned enterprises (SOEs) in South Africa and Singapore, two countries deploying different governance structures for organising SOEs. A proposition was developed in line with dimensionalisation to assess the organising models. The proposition is that SOEs organised using a bilateral governance structure are expected to perform better than those organised using a unified governance structure – since the attributes and characteristics of transactions/contracts are semi-strong in the bilateral structure, according to TCE. Findings appear to support the proposition, indicating that SOEs organised in a bilateral governance structure perform better relative to those that are organised under unified governance. Keywords: dimensionalisation, organising models, ownership models, state-owned enterprises, transaction cost economics (TCE)