Corporate governance of state-owned enterprises in Iran: an exploratory pathology

Abstract

PurposeDespite the rather adequate physical and human resources available to Iranian state-owned enterprises (SOEs), they have proved not only unproductive and unprofitable but also corrupt in cases due to their corporate governance (CG) systems. This study aims to identify the most important challenges faced within designing, implementing and operating such systems in Iranian SOEs.Design/methodology/approachA judgmental sampling technique was adopted for the purposes of the present qualitative study to select a heterogeneous group of interviewees in terms of experience and expert knowledge in CG and SOEs. Using 28 semi-structured interviews and the thematic analysis methodology within an exploratory approach, the themes/challenges were extracted from the data thus collected that were subsequently analyzed and explicated.FindingsThe 16 challenges derived from the data set were subsequently classified into the four categories of “general assembly deficiencies”, “contextual issues of ownership”, “board deficiencies” and “external managerial constraints”.Research limitations/implicationsThis study aims to provide insights into policy-making systems at both national and international levels to gain a better understanding of the contextual factors that could be exploited toward developing and/or reforming CG codes. To improve SOEs, this study also suggests four main solutions to the CG challenges faced within Iran and similar centralized economic planning systems.Originality/valueThe literature on the topic indicates that while a few theoretical and empirical studies have been conducted on CG of SOEs, no study has ever been conducted on similar Iranian cases. The present study provides ample empirical evidence from the CG systems in a state-controlled and centralized economic system to offer new insights into the comparative CG, especially in a developing country like Iran, where the government is the major player in the economy.