African State-owned Enterprises Research Articles

The Corporate Governance of South African State-Owned Enterprises (SOEs): Leadership and Compliance Issues

The financial, operational, and business issues facing SOEs have reduced the trust that investors and citizens have in the state's capacity to effectively promote national economic growth. Most countries, especially developing ones like South Africa, have been plagued by the issue of inadequate public service delivery. One key contributing factor to this problem has been identified as the poor governance practices of SOEs. The magnitude of these massive SOE business failures, which surpassed the failure of numerous other enterprises around the world, drew attention to the urgent need for new corporate governance studies. To contribute to this, the study explores the corporate governance of South African SOEs, with a focus on leadership and compliance. To achieve this, an online questionnaire was used to gather quantitative data from a sample of 288 internal audit professionals. The data collected was then analyzed using SPSS software, and descriptive statistics were employed to present the findings. The study found that corporate governance malpractices are common in SOEs, which include hiring managers and executives who lack the necessary qualifications and experience, high tender irregularities, and understaffing critical duties. This study is unique in that it employs stakeholder theory in an innovative approach to explain the findings, notably on the leadership issue. Besides, it contains critical recommendations for SOE leadership and policymakers on how to improve the corporate governance of SOEs to help them achieve their strategic goals, while also suggesting future study directions.

Understanding tacit knowledge loss in public enterprises of South Africa

Orientation: South African state-owned enterprises (SOEs) are facing a perpetual struggle of institutional tacit knowledge loss, which poses a risk to these entities and threatens their sustainability. The research project endeavoured to tackle these challenges from knowledge management (KM) and human resource management (HRM) perspectives and proposes a plethora of integrated knowledge-driven HRM processes to mitigate risks associated with loss of tacit knowledge.Research purpose: The study provides an integrated understanding of the issues relating to the causes of enterprise tacit knowledge loss and extent to which there is recognition of company knowledge loss in selected SOEs in South Africa.Motivation for the study: There is limited research that provides an integrated approach to tacit knowledge loss from KM and HRM standpoints.Research approach/design and method: The exploratory sequential mixed-methods research design was used in this study. In the qualitative phase of this research, data were collected from the annual reports of the SOEs and unstructured interviews with 20 purposively selected human resource (HR) managers, which was subsequently analysed thematically using ATLAS.ti software. The quantitative data from 145 out of 585 respondents were analysed statistically using Statistical Analysis Software (SAS).Main findings: The study revealed that organisational tacit knowledge loss is largely caused by voluntary and involuntary employee turnover and a lack of retention strategies. This adversely affects the knowledge base and the knowledge absorptive and protective capacities of the SOEs.Practical implications/managerial implications: The study concludes that the journey for ensuring effective knowledge transfer and retention of valuable enterprise knowledge starts with the appreciation of knowledge as a key firm-specific strategic issue.Contribution/value-add: This study offers an integrated understanding of the causes of tacit knowledge loss for effective management in SOEs researched interdependently from KM and HRM perspectives.

Optimising supply chain effectiveness among state-owned enterprises in South Africa

Background: State-owned enterprises (SOEs) play an important role in the economies of many developed and developing countries. However, most SOEs fail to provide efficient or effective public service delivery. Therefore, it is necessary to investigate how SOEs in Gauteng province in South Africa can enhance supply chain effectiveness (SCE).Objectives: In the study, the relationships are investigated between total quality management (TQM), competitive advantage (CA), innovation (IN), SCE in the selected South African SOEs in Gauteng province.Method: A quantitative design was adopted in which a survey questionnaire was administered to 863 supply chain practitioners working in SOEs in South Africa Gauteng province. Data were analysed with the aid of Statistical Package for Social Science (SPSS 27.0) and SMART PLS (version 3.0).Results: The results of the study showed that knowledge management and CA predict the establishment of SCE in SOEs in the Gauteng province. However, IN was not supported but is of significance towards achieving SCE in SOEs in the Gauteng province.Conclusion: The adoption of CA by SOEs over industry competitors is essential toward success.Contribution: The results of this study will contribute to the improvement of South Africa’s economy by enabling SOEs to establish a competitive edge in their respective industries.

Analysis of the relationship between certain audit committee characteristics and key audit matters disclosed in the audit reports of South African state-owned enterprises, using logistic regression analysis

Analysis of the relationship between certain audit committee characteristics and key audit matters disclosed in the audit reports of South African state-owned enterprises, using logistic regression analysis

Communication challenges faced by customers who are less proficient in English and Afrikaans at two South African state-owned enterprises

The Use of Official Languages Act (No. 12 of 2012) applies to all national departments and state-owned enterprises (SOEs) in South Africa and stipulates that they should promote multilingualism when interacting with members of the public and/or customers. The main aim of this study was to investigate how two SOEs, that is, the South African Post Office (SAPO) and Passenger Rail Agency of South Africa (PRASA), manage communication with their customers, particularly those who cannot communicate in English and Afrikaans. Data for this study were gathered through a mixed method approach. Quantitative data (i.e., a Likert-type scale) were gathered from 120 participants who were customers of the two SOEs, and qualitative data (i.e., face-to-face interviews) were gathered from 20 interviewees who were drawn from the 120 participants. The researcher was based in Gauteng, and conducted the study in that province because it was convenient and practical. The data were gathered in Tshwane, Ekurhuleni, Johannesburg, and the West Rand. The study found that customers believed that those who could not communicate in English and Afrikaans did not receive adequate information from the SOEs because of this shortcoming. The study also revealed that the marginalisation of Black South African Languages (BSALs) by SOEs was regarded as justified by some respondents because these SOEs provided services to customers who speak different languages. The study also found that other participants felt that it was necessary for SOEs to continue to use English as the main language of communication with customers because it is an international language, which also promotes unity among the people of South Africa, including customers of SOEs.Contribution: The major contribution of this article to scientific knowledge is that it dwells deeper into how customers of the two SOEs who are less proficient in English and Afrikaans felt excluded in communication with all customers, and this is the first article to do so. Through this article, there is potential that the SOEs will appreciate that customers who are less proficient in English and Afrikaans want major adjustments to be made so they too can feel a sense of belonging and also fully appreciate what is being communicated to all customers, regardless to their proficiency in the two languages.

Ethical Leadership and Employee Creative Behaviour: A Case Study of a State-Owned Enterprise in South Africa

Purpose: The aim of this explanatory study was to critically understand how ethical leadership impacts employee creative behaviour as well as the creative behaviour dimensions, in a South African transport and logistics State Owned Enterprise. Theoretical framework: Leaders set the tone which has a major effect on the organizational climate and the organizational approach and the moral facet of leadership is significant because of the leader’s impact on employees and organizational conduct. Thus, this study is underpinned by the style of leadership which is ethical, since the autocratic style is often seen as lacking ethical conduct. Method: The quantitative method was chosen since a deductive approach was needed to interpret the data. The target population comprised middle and executive managers representing the leaders and low-level managers representing followers and referred to as the employees. Although a sample of 348 employees (followers) was generated using the Raosoft (2004) sample size calculator. The data from 160 respondents comprising managers and employees was collected using predeveloped questionnaires. and analysed through structural equation modelling and multiple regression techniques conducted with the Smart PLS statistical software. The reliability of the research instrument was measured using Cronbach tests, and composite reliability. Validity was also confirmed using lower-order and higher-order construct validity tests. Results and conclusion: It was confirmed that ethical leadership has a significant positive influence on employee creative behaviour, as well as with each of the creative behaviour dimensions namely: idea exploration, idea generation, and idea championing. Originality/value: The influence of ethical leadership on employee creative behaviour in South African SOEs is also not fully understood and large private corporates and government entities have been rocked by corporate governance scandals, resulting in the call for ethical leadership to save companies from collapse and astounding costs from a financial, social and human perspective. No research was conducted on the topic in South African state-owned enterprises and thus the new knowledge generated would contribute to improving leadership and making the enterprises more innovative and thus improve performance.

Adoption of the combined assurance model by South African state-owned enterprises (SOEs)

<abstract> <p>In addition to integrated reporting, which was arguably first introduced by the third King Report on Governance for South Africa (King Ⅲ), King Ⅲ also formally introduced the combined assurance model as a further governance innovation, aimed at enhancing the quality of organisational reporting. Although the combined assurance model is primarily an internal enterprise risk management innovation, designed to incorporate, integrate and optimise all assurance services and functions, it simultaneously enhances the credibility of organisational reporting. Taken as a whole, the combined assurance model enables an effective control environment, supports the integrity of information used for internal decision-making by management, the governing body and its committees; while supporting the integrity of the organisation's external reports. Organisations adopting King Ⅳ, including state-owned enterprises (SOEs), are expected to explain how the provisions of the combined assurance model have been implemented. Explaining conformance, introduces an element of innovation into organisational reporting as envisaged by King Ⅳ, by providing stakeholders with assurance about the veracity of the disclosures contained in the internal and external reports of organisations. This exploratory paper analyses the extent to which South African SOEs have conformed to seven key combined assurance indicators. The disclosures contained in the publicly available annual/integrated reports of South African SOEs, listed in Schedule 2 of the Public Finance Management Act (PFMA), were thematically analysed to fulfil the objective of the study. We found that although the combined assurance related disclosures suggest high levels of adoption by some SOEs, the majority have not provided sufficient information to explain how they have applied combined assurance, if at all. Although their reports appear to provide internal management with some level of assurance about the extent to which risks have been managed, these reports may not necessarily provide external users with confidence that all material risks have been effectively mitigated, within the organisation's risk appetite. This paper discuses implications for policy and practice and concludes by providing avenues for further research.</p> </abstract>

Eff ective management of public enterprises in Africa for the successful implementation of development goals

While some literary sources express the opinion that it is practically impossible to cultivate a good corporate governance culture at state-owned enterprises (SOEs), others believe that new strategies for implementing corporate governance systems in combination with political will can bring SOEs to a more effective level of management. The article presents an analysis of controversial views on the possibility of creating effective management mechanisms in state-owned enterprises, examines the eff ective costs of management failures in state-owned enterprises in Kenya, Zimbabwe, South Africa and Ethiopia. The author draws conclusions and recommendations that the determining factor for the success of state-owned enterprises in African countries is the reaction of the central government to the problems of state-owned enterprises. Structural reforms, good governance, clear goals and effi ciency require a strong stance from Governments. As a long-term remedial measure, knowing which enterprises and when to unload through privatization is one of the options for solving management problems in African state-owned enterprises. As for strategic state-owned enterprises, the document recommends that governments consider the possibility of placing them on public stock exchanges.

Human resource management as a facilitator of a knowledge-driven organisational culture and structure for the reduction of tacit knowledge loss in South African state-owned enterprises

Background: Many state-owned enterprises (SOEs) in South Africa face the serious problem of knowledge-unfriendly organisational cultures, structures and human resource management (HRM) practices that hinder the reduction of the risks associated with tacit knowledge loss.Objective: The article examines the role of HRM in facilitating knowledge-driven organisational cultures and structures for the reduction of tacit knowledge loss in South African SOEs.Methods: The study deployed an exploratory sequential mixed methods research design to examine the role of HRM in facilitating organisational cultures and structures that are supportive of knowledge management (KM). In the qualitative phase, data were collected through interviews with 20 purposively selected HR managers in nine SOEs. In the quantitative phase, a questionnaire was distributed to 585 randomly selected employees in three state-owned companies. The instrument was considered reliable with a Cronbach’s alpha of 0.94 and a response rate of 25%.Results: The research findings revealed that a majority of organisational cultures and structures in SOEs did not facilitate or assist to propel and support KM activities, behaviours and practices. On a positive note, human resource managers acknowledge that they have a crucial role to play in influencing culture management and structural designs in their companies to boost KM activities, behaviours and cultures.Conclusion: Numerous SOEs did not exhibit certain knowledge-driven behaviours and cultures because of a lack of structures to drive KM. Human resource managers did not exert their role in driving and influencing such knowledge-based behaviours, cultures and structures to lessen potential tacit knowledge loss.

Organizational Benefits of Human Resource Management Roles in South African State-owned Enterprises

Human Resource Management practitioners have been criticized for lacking business acumen due to the nature of the personnel management concept. There has been a change in Human Resource Management roles from traditional personnel management to Strategic Human Resource Management which seeks to provide organizational competitiveness. This article aims to provide organizational benefits of Human Resource Management to an organization as a result of the Strategic Human Resource Management concept. The strategic nature of Human Resource Management has been revealed in this article as there is evidence of Human Resource Management's contribution to the business success. This paper is a study carried out in a South African State-owned enterprise to identify organizational benefits acquired from Human Resource Management roles. Qualitative research was used in this study, and interviews were administered to obtain data from Human Resource practitioners and departmental supervisors in a state-owned enterprise. 24 participants were purposively selected to provide data for the study. This study revealed that the Human Resource department provides beneficial activities to the organization such as reduction of employee turnover, employee development, employee wellness, and internal communication. The critical discussion provided in this paper would strengthen the body of knowledge on the role of Human Resource Management in improving organizational effectiveness.

State and market

Abstract Despite the general demise of the phenomenon of state-owned enterprises (SOEs) in Europe since the 1970s, SOEs remained central to state economic planning in African markets after independence. Weak performance of African SOEs since the 1960s, mitigated reforms and some privatisation. The opening up of markets in Africa and states’ alignment to the market economic model, contributed to a different approach to the managing and operation of SOEs. The UNCTAD list of top non-financial conglomerates in the developing world includes two African SOEs. The lack of capital, access to modern technology and professional managerial skills (human capabilities), hampered the development of national economies in Africa. The state has re-entered the market in a different role as facilitator of private enterprise, but also as entrepreneur in strategic industries. Global resurgence of SOEs in the 21st century witnessed a new generation global SOEs, also in some African cases. This paper will assess the development of the «new generation» SOEs in Africa since the last decade of the 20th century using the case study of Sonatrach in Algeria.

Mitigating risks of tacit knowledge loss in state-owned enterprises in South Africa through knowledge management practices

Background: State-owned enterprises (SOEs) in South Africa face a serious challenge of knowledge loss caused largely by resignations, the ageing workforce and a lack of knowledge management (KM) practices. Objective: This article explores KM practices in the South African SOEs to mitigate the risks inherent in tacit knowledge loss. Methods: The study adopted a mixed methods research strategy using an exploratory sequential design to identify KM practices and their effectiveness in addressing the issue of tacit knowledge loss. The qualitative data was collected through the interviews and document analysis of 2018 annual reports in nine SOEs across five market sectors. A survey questionnaire was distributed to 585 respondents, with a 25% response rate (145) for quantitative data in three SOEs. Results: The results revealed that the majority of the SOEs lacked KM practices in their structures. The lack of KM practices implies that the SOEs are lagging behind in knowledge protective capacities to mitigate the risks inherent in the organisational tacit knowledge loss. With many South African SOEs, facing all these sorts of knowledge loss risks and a lack of KM practices to mitigate them, achieving the objectives of a developmental state remains a far-fetched idea. Conclusion: The absence of KM practices negatively affected knowledge transfer and retention in most of the SOEs. A lack of KM practices will negatively affect their performance and their sustainability to deliver on their developmental mandate. Investment in KM practices will assist SOEs to mitigate the risks associated with loss of organisational tacit knowledge.

Comparing corporate governance practices of state-owned enterprises (SOEs) in South Africa and Singapore

Research aims: This paper undertakes a cross-country comparative analysis of corporate governance of state-owned enterprises (SOEs) in South Africa and Singapore, two countries using two different models for organising SOEs, with specific reference to agreement with the themes identified in the World Bank’s Framework for good Corporate Governance practices for SOEs. The aim of this paper is to identify differences and similarities in practice and to document how the states have fared using different models.Design/Methodology/Approach: The paper deploys a pragmatic mixed methods approach conducted in two phases, to understand the practices utilised by South African and Singaporean SOEs. The data emerging from these two phases, were compared to the Framework for good Corporate Governance practices for SOEs issued by the World Bank.Research findings: Findings suggest although South African SOEs have good corporate governance practices in place, Singaporean SOEs are better organised and governed compared with South African SOEsTheoretical contribution/Originality: This paper contributes to the scholarly discourse on SOEs in by expanding the discourse on public sector entrepreneurship and opening up new debates and research areas corporate governance of SOEs.

Ethical leadership and public accountability: Problematiques of South Africa’s State-Owned Enterprises

This paper aims to explore the potency of ethical frameworks in the advent of a democratic dispensation in State-Owned Enterprises in an attempt to address conundrums of unethical leadership and devastating public accountability. This paper argues that South Africa is grappling with fitting in the notion of ethos and accountability. On the same line, the contestation about the impasse of the State-Owned Enterprises (SOEs) befits germane in the topical and constant political transformation in South Africa. SOEs endure eccentric to those serving it and those who benefit from it, leading to a lack of orthodoxy by public officials to ethical framework prescribed and contemplated in legislation for good conduct in public services. Ethical leadership and public accountability are two sides of the same coin; however, they serve as a nut and bolt of a well-functioning public administration. The two are inseparable. The paper is theoretical as such, and it is epistemologically juxtaposed and grounded or underpinned by agency theory and its ideals. Be that as it may, it further depends on literature base review for its premise, argument, crux, and purpose and drawing up results and conclusion. Thus, the paper gathers information regarding the various scholars’ notions on ethical leadership and public accountability from related articles, journals, and books. The paper reveals that the South African State-Owned Enterprises are antagonized and branded by unethical leaders and public accountability challenges. At this juncture, the SOEs are faced with poor fiscal coordination and management. The paper further reveals that the SOEs are swimming in the pool of debts. The conclusion that can be deduced from this paper is that it calls for strengthening and reforming all legislative prescripts that govern the State-Owned Enterprises. Public administrators must avoid incubating politicians as it creates the ground for corruption and various types of ethical dilemmas.

The adoption of integrated reporting by state-owned enterprises (SOEs) – an international comparison

PurposeThis paper aims to establish the extent to which South African state-owned entities (SOEs), where integrated reporting is a quasi-mandatory reporting requirement, have incorporated the principles of the international integrated reporting framework. These identified South African SOE reporting practices are compared with the ‘integrated reporting’ related disclosures of SOEs in selected countries, where integrated reporting remains voluntary.Design/methodology/approachThis paper deploys a qualitative research approach, to thematically analyse the content of publicly available annual or integrated reports of South Africa SOEs, as the primary country of analysis, with those of their counterparts in five purposively selected countries. The relative scores for the SOEs of each country is calculated using a disclosure index derived from the international integrated reporting framework principles.FindingsThe paper found that despite being a quasi-mandatory reporting requirement, not all South African SOEs complied with all the international integrated reporting framework principles. Accepting the assertion that integrated reporting enhances organisational transparency and accountability, the accountability disclosure practices of South African SOEs appear more comprehensive than their counterparts in other countries.Originality/valueExtant research into integrated reporting has primarily focussed on the profit-seeking private sector, with limited research into its applicability in the public sector. This paper attempts to address this paucity by examining aspects of integrated reporting by South African SOEs, which are then compared to accountability reporting practices in other countries.

Risk management factors contributing to transgressions in the procurement practices in South African SOEs

PurposeThe study aims to deepen the understanding of why risk management principles are circumvented, thereby contributing to transgressions in public procurement for South African state-owned enterprises (SOEs). A deeper understanding of why risk management principles are circumvented is especially important in South Africa, given the high social, economic and environmental risks to which national and major SOEs are exposed in the procurement process.Design/methodology/approachThe study uses a qualitative design, based on detailed semi-structured interviews with 19 participants comprising management advisors, forensic investigators and auditors to explore why risk management principles are circumvented by South Africa SOEs.FindingsThe results of the study indicate that the tone that is set at political and executive level plays an important role in determining compliance with risk management principles by lower-level staff. Intense levels of political influence at SOEs are the main reason behind risk management systems being undermined.Originality/valueThe current study is one of the first explorations of why transgressions in public procurement continue to be evident despite risk management reforms being adopted by South Africa public sector. The research responds to the call for more studies on why reforms in South Africa public sector are not reducing transgression in public procurement. The study provides primary evidence on the importance of political and executive leadership in influencing the effectiveness of risk management reforms in the public sector.

TRANSFORMATION OF GOVERNANCE IN STATE-OWNED COMPANIES: THE CASE OF SOUTH AFRICA AS A DEVELOPING COUNTRY

The basis of this article is an article published by Thomas (2012) whose objective was to track over a two-year period the performance of five strategic South African state-owned enterprises with regards to issues of governance. These enterprises were ESKOM, South African Airways (SAA), South African Broadcasting Corporation (SABC), Telkom, and Transnet. The paper revealed that there were serious transgressions in these entities and recommendations were made to address these. The aim of this article therefore was to establish whether or not the transgressions reported by Thomas are still happening within these entities. The data was collected from the 2014/2015, 2015/2016, 2016/2017, and 2017/2018 financial reports of these entities. The study revealed that the transgressions are still taking place. With regards to issues of sustainability SAA and SABC continue to make loses, with SAA continuing to be bailed out by the South African government against the will of the South African general public. Fruitless and wasteful expenditure increased in all the five entities mentioned above and no serious action has been taken by the South African government to hold the people responsible accountable. While Telkom, Transnet and Eskom were making profits these profits are not at the envisaged level.

Assessing the Effectiveness of Human Resource Management in Creating Organisational Competitiveness in a South African State-Owned Enterprise

South African state-owned enterprises (SOEs) have been underperforming for the past decade riddled with poor service delivery, employee retrenchments, lack of employee motivation and inability to embrace innovative approaches in management of business. There has been a call from the South African government for SOEs to self-renew and become effective in service delivery. As a result the role of human resource management (HRM) assist organisations to become effective through the use of innovative human resource practices. This paper is an investigation carried out at a selected South African SOE to determine the effectiveness of HRM in creating organisational competitiveness. A qualitative research approach was adopted where interviews were used to gather data from the company’s human resource practitioners and departmental heads. Non-probability sampling was used and 24 participants were purposively selected. The study revealed that HR practitioners do not participate in policy reviews whereas their skills are underutilised, they lack latest technology and it was noted that there is excessive control from high authorities. 
 
 Received: 11 February 2021 / Accepted: 16 March 2021 / Published: 17 May 2021

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Purpose: The dissatisfaction with executive remuneration worldwide has increased because it is generally believed to have been instrumental to the 2008 Global Economic crisis. Central to this is the apparent unsatisfactory relationship between business performance and chief executive officer (CEO) remuneration. The primary aim of this study was to compare the pay-for-performance association between CEOs’ remuneration and state-owned entity performance before, during and after the economic crisis. It did so by assessing the chief executive remuneration link with state-owned enterprise performance from the period 2006 to 2014. Design/methodology/approach: Twenty-one schedule 2 state-owned enterprises in South Africa. This quantitative, longitudinal study, obtained secondary data from the annual reports of state-owned enterprises from the period 2006 to 2014. Ordinary least square multiple regression analysis was used as the principal statistical method. Findings/results: The findings indicate that the link between chief executive remuneration and state-owned entity performance demonstrated different patterns in the pre- and post-crisis periods. Practical implications: State-owned entity remuneration committees should place more emphasis on the financial efficiency measurements to enhance efficiencies in South African state-owned enterprises. Shareholders and regulators should take cognisance of measures to be used to assess the potential performance of state-owned entities, through executive remuneration, especially during an economic crisis. Findings could furthermore be of importance to other academics investigating this phenomenon. Originality/value: This research provides additional knowledge to the limited research available on SOEs in South Africa. Further, it reveals that an economic downturn affects the link between CEOs’ remuneration and SOE performance. This addresses a knowledge gap concerning the pay-for-performance link in South African SOEs and in emerging economies in general.

An assessment of corporate governance implementation in state-owned enterprises of the emerging economy

South African state-owned enterprises (SOEs) form a critical cog in the state machinery. The significance of sound corporate governance has become more pronounced as citizens demand more accountability and value in the use of public resources (Vicente, 2020). The paper utilised a qualitative desktop approach, a case study design and thematic analysis to investigate board and executive management practices in the North West Development Corporation (NWDC) corporate governance, factors hindering good corporate governance and lastly recommendations that can be offered to enhance good corporate governance. The NWDC is a regional development finance institution in South Africa, which over the years has continued to implement adverse audit outcomes (AGSA, 2019b). The thematic analysis findings revealed a direct relationship between lack of consequence management and the state of poor corporate governance in the NWDC. The lack of ethical leadership lies at the heart of this morass of SOEs in general. The study, therefore, recommends the full implementation of the existing legislative framework, the Codes on Good Governance and the anti-corruption national strategy in order to inculcate accountability in the South African public agencies that include the NWDC. The paper is relevant in addressing the Auditor-General qualified audits, which underlines the ineffectiveness of the existing SOE governance system by not inherently correlating corporate success with the presence of deeper corporate governance standards and ethical behaviour.