MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF BUSINESS MANAGEMENT

EFFECTIVENESS OF BOARD COMPOSITION ON THE

PERFORMANCE OF ZIMBABWE STATE ENTERPRISES &
PARASTATALS (SEP’S).

By

HEPSON NYASHA MUREGWI

(R122079X)

Dissertation submitted in partial fulfillment of the requirements of the

Master of Commerce Degree in Strategic Management &
Corporate Governance

October, 2018
Gweru, Zimbabwe

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 RELEASE FORM

The undersigned certify that they have read and recommend that Midlands State University
accept a dissertation entitled: “Effectiveness of board composition on the Performance of
Zimbabwe State Enterprises & Parastatals (SEP’s).” submitted by Hepson Nyasha Muregwi
in partial fulfilment of the requirements of the Master of Commerce Degree in Strategic
Management.

SUPERVISOR’S SIGNATURE...........................................................................DATE.......................................

CHAIRPERSON ’S SIGNATURE…………………............................................ DATE.......................................

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 DECLARATION

I Hepson N. Muregwi, hereby declare that this dissertation is the result of my own investigation
and research, except to the extend indicated in the acknowledgements and references and by
acknowledged sources in the body of the report, and that it has not been submitted in part or full
for any other degree to any other University or College.

_______________________________ _____________________
Student Signature Date

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 DEDICATION
I dedicate this project to my parents (Hepson Snr and Tariro Muregwi), and My fiancé
Tanyaradzwa Mugaradziko whose support helped me get through the whole programme. Their
support has been instrumental in the completion of this academic journey.

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 ACKNOWLEDGEMENTS

The compilation of this project would not have been possible without the great participation of
my academic supervisor Mr Maibvisira, Various State Enterprises and Parastatals managers,
employees and other stakeholders, colleagues, family, relatives and friends. I would like to
acknowledge the tireless efforts of everyone who was involved in shaping the content of this
dissertation.

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 ABSTRACT
The purpose of this research was to explore how board composition affect or influence the
performance of state enterprises and parastatals in Zimbabwe. There was little research that had
been carried out to examine the composition and effectiveness on firm's performance. The
effectiveness of Zimbabwe public entity boards was largely questioned in the past years due to
lack of commitment and consistency, political interference, weak enforcement mechanisms,
corruption and general disregard for the rule of law, which has ultimately resulted in poor
performance of these organizations. Hence, the need to carry out this investigation. Literature
covered different aspects, such as the general overview of corporate governance, different
constituents of board composition such as board policy, experience, age, expertise and gender.
More so, the literature reviewed ways to measure performance of public entities. The research
methodology followed in this enquiry was a survey research design which was quantitative in
nature. A total of twenty parastatals were surveyed in this study and the population for the study
comprised of state enterprises and parastatals various stakeholders located in Harare which
amounted to 480 people. This research was conducted through a survey where pre-coded
structured questionnaires were administered to different stakeholders in Zimbabwe public
entities. A total of 129 questionnaires which included a non-response allowance of 7% were sent
to different parastatals stakeholders in Harare. Of 115 questionnaires that were returned, 1was
discarded and consequently, 114 questionnaires were considered useful for this research
achieving a 95 % response rate. These questionnaires were eventually used for further data
analysis and presentation of results upon which this study is based on. SPSS was used to capture
clean data and the main data analysis method used was Categorical Principal Component
Analysis. The value from KMO & Bartlett’s test and Cronbach’s alpha proved that the data
obtained from the sample was adequate and reliable. Results of the study confirmed five
hypotheses (H1 to H5) at 5% level of significance. A simple ANOVA conducted obtained a
significance value of 0.000 for H1 to H5. Alternative hypotheses H1 to H5 were accepted
because p-value (0.000) < 0.001. Thus, it was proven that different aspects of board composition
have a direct effect on the performance of state enterprises and parastatals in Zimbabwe. To
improve the effectiveness of state enterprises and parastatals boards, it was found that boards
should be properly empowered, government intervention should be minimized, board
appointment processes should be transparent and merit-based, and boards should be properly
composed.Therefore, recommendations were made on how best to improve the effectiveness of
boards of public entities in order to enhance performance in Zimbabwean public entities. Thus,
the study recommended that public entities in Zimbabwe should be made up of well-composed
boards with great diversity and leadership that will influence efficiency and effectiveness. It was
further recommended that state enterprises and parastatals should strive to improve service
delivery, transparency and accountability so as to improve their general performance. For further

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research, the study recommends that there is need to investigate the impact of political
intervention in the operations of the board and the public entities.

TABLE OF CONTENTS
RELEASE FORM............................................................................................................................i
DECLARATION.............................................................................................................................ii
DEDICATION...............................................................................................................................iii
ACKNOWLEDGEMENTS............................................................................................................iv
ABSTRACT....................................................................................................................................v
LIST OF TABLES...........................................................................................................................x
LIST OF FIGURES........................................................................................................................xi
LIST OF APPENDICES...............................................................................................................xii
LIST OF ABBREVIATIONS......................................................................................................xiii
CHAPTER ONE..............................................................................................................................1
INTRODUCTION...........................................................................................................................1
1.1 Introduction................................................................................................................................1
1.2 Background of the study............................................................................................................1
1.2.1 Figure 1: Military Appointments in SEP’s.............................................................................5
1.3 Statement of problem.................................................................................................................6
1.4 Research objectives...................................................................................................................7
1.5. Research hypothesis..................................................................................................................8
1.6 Significance of the study...........................................................................................................8
1.6.1 To theory.................................................................................................................................8
1.6.2 To practice..............................................................................................................................8
1.7 Conceptual framework...............................................................................................................9
1.8 Assumptions of the study.........................................................................................................10
1.9 Delimitation/ scope of the study..............................................................................................10
1.9.1 Theoretical scope..................................................................................................................10
1.9.2 Time scope............................................................................................................................10
1.8.3 Geographical scope...............................................................................................................10

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1.8.4 Methodology scope...............................................................................................................11
1.10 Limitations of the study.........................................................................................................11
1.11 Definition of key terms..........................................................................................................12
1.12 Chapter summary...................................................................................................................12
CHAPTER TWO...........................................................................................................................13
LITERATURE REVIEW..............................................................................................................13
2.1 Introduction..............................................................................................................................13
2.2 Theoretical literature review....................................................................................................13
2.2.1 Overview of corporate governance.......................................................................................13
2.2.1.1 Essential principles of corporate governance....................................................................15
2.2.1.2 International initiative s on corporate governance.............................................................16
2.2.1.3 Corporate Governance in SEP’s........................................................................................17
2.2.2 Overview of state owned enterprises....................................................................................18
2.2.3Board Composition................................................................................................................19
2.2.3.1 Fundamentals of an effective board...................................................................................22
2.2.3.2 Role of the board...............................................................................................................23
2.2.3.3 Selection and appointment of board members...................................................................24
2.2.3.4 Board quality.....................................................................................................................26
2.2.3.5 Board size..........................................................................................................................26
2.3 Components of board composition..........................................................................................27
2.3.1 Board gender.........................................................................................................................27
2.3.2 Board expertise.....................................................................................................................29
2.3.3 Board age..............................................................................................................................29
2.3.4 Board experience..................................................................................................................30
2.3.5 Board Policy.........................................................................................................................31
2.4 Measurement of SEP’s performance.......................................................................................31
2.4.1 Profitability...........................................................................................................................32
2.4.2 Organizational efficiency......................................................................................................32
2.4.3 Service delivery....................................................................................................................33
2.4.4 Organizational effectiveness.................................................................................................34
2.5 Empirical review......................................................................................................................35
2.6 Implications of the reviewed literature....................................................................................36

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2.7 Chapter summary.....................................................................................................................37
CHAPTER THREE.......................................................................................................................38
METHODOLOGY........................................................................................................................38
3.1 Introduction..............................................................................................................................38
3.2 Research philosophy................................................................................................................38
3.3 Research design.......................................................................................................................38
3.4 Population................................................................................................................................39
3.5 Sampling methods and techniques...........................................................................................39
3.5.1 Sampling techniques.............................................................................................................39
3.5.2 Sample size...........................................................................................................................40
3.6 Data sources.............................................................................................................................40
3.7 Data collection instruments.....................................................................................................40
3.7.1 Pre-testing of the questionnaire............................................................................................40
3.8 Data collection method............................................................................................................41
3.8.1 Primary data collection.........................................................................................................41
3.8.2 Secondary data collection.....................................................................................................42
3.9 Data analysis and presentation techniques..............................................................................42
3.9.1 Data Analysis technique.......................................................................................................42
3.9.2 Data Presentation technique.................................................................................................42
3.10 Validity and Reliability..........................................................................................................42
3.10.1 Validity...............................................................................................................................42
3.10.2 Reliability...........................................................................................................................43
3.11 Ethical considerations............................................................................................................43
3.12 Chapter summary...................................................................................................................44
CHAPTER FOUR.........................................................................................................................45
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS.................45
4.1 Introduction..............................................................................................................................45
4.2 Overall response rate...............................................................................................................45
4.3 Sample adequacy.....................................................................................................................46
4.4 Questionnaire reliability..........................................................................................................47
4.5 Demographic statistics.............................................................................................................47
4.5.1 Age of the respondents.........................................................................................................47

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4.5.2 Education level.....................................................................................................................48
4.6 Analysis of results by hypothesis............................................................................................49
4.6.1 Factor Analysis.....................................................................................................................50
4.6.2 H1: There a positive relationship between board experience and profitability.....................50
4.6.3 H2: There is a positive relationship between board policy and service delivery...................53
4.6.4 H3: There is a positive relationship between board expertise and contribution to GDP......56
4.6.5 H4: There is a relationship between ages of board members and organizational efficiency.59
4.6.6 H5: There is a positive relationship between board gender balance and organizational
effectiveness..................................................................................................................................64
4.7 Conclusion...............................................................................................................................67
CHAPTER FIVE...........................................................................................................................68
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.................................................68
5.1 Summary of the study..............................................................................................................68
5.2 Conclusions of the study..........................................................................................................69
5.2.1 H1: There is a positive relationship between board experience and profitability................69
5.2.2 H2: There is a positive relationship between board policy and service delivery.................70
5.2.3 H3: There is a positive relationship between board expertise and contribution to GDP......70
5.2.4 H4: There is a positive relationship between ages of board members and organizational
efficiency.......................................................................................................................................71
5.2.5 H5: There is a positive relationship between board gender balance and organizational
effectiveness..................................................................................................................................71
5.3 Recommendations....................................................................................................................72
5.3.1 Appointment of capable individuals to lead the state enterprises and parastatals............72
5.3.2 Perform rapid audit control measures...............................................................................72
5.3.3 Appointing female board members to ensure gender in parastatals governance..............72
5.3.4 Put in place rules and regulations that promotes transparency and accountability...........72
5.3.5 Improved disclosure of information to the public.............................................................72
5.3.6 Privatization of other State enterprises and parastatals.....................................................72
5.4 Areas for further study.............................................................................................................72
REFERENCE LIST.......................................................................................................................74

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 LIST OF TABLES

Table 4.2: Response Rate.........................................................................................................45

Table 4.3: KMO and Bartlett Test............................................................................................46
Table 4.4: Reliability Test........................................................................................................47
Table 4.5: Gender of Respondents...........................................................................................47
Table 4.6: Age of Respondents................................................................................................48
Table 4.7: Total Variance Explained: Board experience and profitability..............................50
Table 4.8: Rotated Component Matrix: Board experience and profitability............................51
Table 4.9: ANOVA: Board experience and profitability.........................................................52
Table 4.10: Coefficients: Board experience and profitability .................................................52
Table 4.11: Total Variance Explained: Board Policy and Service Delivery............................53
Table 4.12: Rotated Component Matrix: Board Policy and Service Delivery ........................54
Table 4.13: ANOVA: Board Policy and Service Delivery .....................................................55
Table 4.14: Coefficients: Board Policy and Service Delivery.................................................55
Table 4.15: Total Variance Explained: Board expertise .........................................................56
Table 4.16: Rotated Component Matrix: Board expertise.......................................................57
Table 4.17: ANOVA: Board expertise.....................................................................................58
Table 4.18: Coefficients : Board expertise...............................................................................58
Table 4.19: Total Variance Explained: ages of board members ............................................60
Table 4.20: Rotated Component Matrix: ages of board members ..........................................61
Table 4.21: ANOVA: ages of board members and organizational efficiency.........................62
Table 4.22: Coefficients: ages of board members and organizational efficiency....................63
Table 4.23: Descriptive Statistics: ages of board members and organizational efficiency .....63
Table 4.24: Total Variance Explained:Gender Balance ..........................................................64
Table 4.25: ANOVA:Gender balance .....................................................................................65
Table 4.26: Respondents Bar Graph: Gender Balance.............................................................66

x
LIST OF FIGURES

xi
LIST OF APPENDICES

xii
 LIST OF ABBREVIATIONS

CEO Chief Executive Officer

CSC Cold Storage Commission

GDP Gross Domestic Product

GCGF Global Corporate Governance Forum

RBZ Reserve Bank of Zimbabwe

NRZ National Railways of Zimbabwe

SEP’s State Enterprise & Parastatals

UN United Nations

USA United States of America

ZACC Zimbabwe Anti-Corruption Commission

ZBC Zimbabwe Broadcasting Corporation

ZESA Zimbabwe Electricity Supply Authority

ZMDC Zimbabwe Mining Development Corporation

ZSE Zimbabwe Stock Exchange

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xiv
 CHAPTER ONE

INTRODUCTION

1.1 Introduction
This chapter discusses the following; background to the study, problem statement, research
objectives, hypothesis, problem statement, the significance of the study, conceptual framework,
delimitations and assumptions of the study.

1.2 Background of the study

According to the State-owned enterprises’ annual corruption report of 2015, Zimbabwe State
Enterprises & Parastatals (SEP's) were the most effective strategic pillars that helped the
Zimbabwean economy to be robust and perform well in the early 1990's. However, in recent
years Zimbabwe has experienced a decline in SEP's performances and they have suffered a
slump that has also grossly and negatively affected the whole economy. Mandaza (2014) and
Mhandu (2015), blame this slump to hyperinflation, high unemployment levels or other
economic problems, but it is of greater importance to note that this decline in SEP’s is also partly
because of poor corporate governance and lack of transparency & accountability within these
organizations.

Board composition in corporate governance has been identified to be critical for corporate
performance especially in emerging and transition economies (Siwadi et al, 2015). More so,
Shungu et al (2014) established that an effective board depends on an effective selection process
for new directors, which in turn rests on a clear definition of what the duties of a director are,
hence also, the board should, therefore, be structured and composed of in such a way that it will
act to monitor itself. Wushe et al (2015) point out that another important factor that has resulted
in poor board performances in SEP’s is a lot of inconsistencies in board tenures, there are
significant numbers of cases in which boards changed with changes in line ministers, hence this
affected continuity in strategy implementation. In 2017 a public expenditure review of SEPs was

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jointly undertaken and published by the Government of Zimbabwe and the World Bank and they
recognized challenges in corporate governance. A good example is that boards of all commercial
SEPs are appointed by line ministries although the appointment process does not adhere to basic
corporate governance requirements on board composition, hence, this has resulted in relatively
weak boards, leading to insufficient oversight (The Sunday Mail,13 May 2018).

Many researchers, such as (Chavanduka et al 2014), have argued that the erosion of investor
confidence in Zimbabwe has been brought about by companies’ board composition standards
and a lack of transparency in their financial system. More so, several companies have faced
difficulties associated with board failure (The Financial Gazette, 9 June 2016) as evidenced by
the collapse of many SEP’s in Zimbabwe. Of note are companies like ZESA, PSMAS, ZBC to
mention but a few.

Vagliasindi (2008) established that policymakers in several countries have turned to independent
directors as an important element of legal and policy reforms in the field of corporate governance
both in developed and developing countries. This has translated into many codes and best
practice recommendations requiring the introduction of a minimum percentage of independent
directors both for the Board as a whole as well as for some sub-committees, with particular
reference to the audit committees. Britain’s own set of corporate scandals led to one of the most
influential reports, the Cadbury Report of 1992, which recommended, along with subsequent
similar reports and studies, a greater role for outside and independent directors. The last decade
has seen a number of corporate law reforms in Japan designed to enhance the role of directors
and auditors not tied to management. In the United States, insider-dominated Boards have been
rare for years.

Although the New York Stock Exchange (NYSE) has required that independent directors
constitute a Board majority in domestic companies only since 2004, as of 2001 approximately
75% of NYSE-listed companies already had such majorities (Sandada et al 2014). More so
Sandada et al (2014) points out that the modest role for independent directors contemplated in
the listing rules of the NYSE a few years ago has given way, in the wake of Enron and other
corporate scandals, to federal mandates for listed companies under the Sarbanes-Oxley Act
(2002) and under the current NYSE listing rules, the Board overall must have a majority of
independent directors. The experience of some emerging countries can be particularly

2
enlightening. Mohamed (2014) disclosed that the interest of China in independent directors pre-
dated the corporate scandals that led to federal-level corporate governance reforms in the United
States, possibly because of the many similar scandals that had already occurred among
companies listed on the two Chinese stock exchanges. Chinese policymakers and academics
despaired of the power of the Supervisory Board to act effectively, and began promoting the
institution of independent directors, particularly in publicly listed companies, as a way of
strengthening supervision.

SEPs occupy an important place in the economy of Zimbabwe. They have the potential to
contribute approximately 40% to the GDP, account for a large share in domestic capital
formation, industrial investment and employment creation (RBZ, 2007). According to Mutanda
(2014), SEPs are viewed as key socioeconomic enablers in those areas where the private sector is
reluctant to invest due to inadequate investment, scarcity of capital, high-risk aversion, and
poorly developed markets. The principles for the establishment of SEPs are operational
autonomy, flexibility, results orientation, value for money and greater accountability and
transparency that are difficult to realize in mainstream government bureaucracy (Rondinelli,
2005).

Rusvingo (2014) also emphasized that SEPs are different from government departments by
virtue of incorporation, operational autonomy, commercial and quasi-commercial orientation,
self-accounting principles and accountability. However, it is almost trite to say that SEPs sector
in Zimbabwe is dysfunctional. The actual performance of SEPs has not been good both in
financial terms and in the effective and efficient supply of key inputs and services to the
economy, this is because today SEPs are operating for extended periods without full Boards as
exemplified by the Professor Gudyanga one-man board for the Minerals Marketing Corporation
of Zimbabwe and the Zimbabwe Mining Development Corporation when he was the Secretary
for Mines and Mining Development, more so board membership shifting with changes in line
with ministers. Ministers responsible for SEPs appoint directors using criteria that are not
standard, resulting in seats being taken up mostly by their cronies, friends, and relatives (Sunday
Mail, Sunday 13 May 2018).

As a consequence, SEPs suffer from gross mismanagement, inefficient use of productive capital,
corruption, dilapidated equipment, lack of credit lines, and debt overhang because the directors

3
become too powerful, lack dedication and are often compromised and conflicted in exercising
their fiduciary duties (Ministry of State Enterprises and Parastatals 2012; Zvavahera, 2014). For
instance, the National Railways of Zimbabwe (NRZ) is a pale shadow of its former self currently
operating below 10% capacity utilization and has not been paying its workers for the past few
consecutive years. The Cold Storage Commission (CSC) has closed its plants in Masvingo,
Chinhoyi, Kadoma, and Marondera. It is currently operating below 5% capacity utilization in
Bulawayo. According to the former minister of finance, GMB was cobbling an average of US$1
million per month during the era of the Government of National Unity (GNU) and yet it
retrenched 1229 employees in 2013 alone (Mutanda 2014). More telling is the Zimbabwe
Electricity Supply Authority (ZESA) which is unable to generate enough power for domestic
users let alone for the industry and has lost a lot of revenue through importing expensive
electricity from Eskom South Africa (Financial Gazette June 9, 2016).

Thus, the performance of SEPs in Zimbabwe today has fallen far short of what is required by the
economy and the general public. On a more general note, as Zhou (2012) puts it, the majority of
SEPs in Zimbabwe are operating under untenable operational frameworks of dilapidated
infrastructure and equipment, huge debts, undercapitalization, skills deficits, vandalism and
looting by top-ranking government officials and politicians. The implication of this is that SEPs
are typically inefficient due to lack of proper board management, supervision and also boards
having an inappropriate balance of skills; Inadequate board training; Inadequately managed
conflict of interest; and some members sitting on too many boards without meritocracy or the
required professional expertise which is affecting their financial viability and also their general
performance (Sunday mail, Sunday 13 May 2018).

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1.2.1 Figure 1: Military Appointments in SEP’s

(Table 1 Adapted: Zimbabwe annual state of corruption report focused on SEP’s 2016)

According to the OECD principles on corporate governance (2005), boards must have the
necessary authority, competences and objectivity to carry out their functions of strategic
guidance and monitoring of management, and also boards must also be held accountable for their
actions. As highlighted in the Corporate Governance Bill for SEPs of 2017, SEPs must be
subjected to effective performance monitoring and they must observe high standards of
transparency and accountability and be subject to the same high quality of financial and non-

5
financial reporting and disclosure requirements as their private sector counterparts. Researchers
such as Ndlovu et al (2015) concluded that, more often than not, government officials,
management and the board of directors are responsible and accountable for ineffective corporate
governance structures and the poor performance of public entities, Hence, to achieve the desired
effectiveness and business success, boards in public entities need to effectively discharge their
duties and observe good corporate governance.

According to Clarke et al (2012) good corporate governance is accordingly a necessity for the
modern complex and dynamic business environment to ensure long-term sustainability, attract
investment capital, maintain economic stability and encourage growth, hence it should, as a
result, be cultivated and constantly practiced by both private and public entities. In an economy
such as Zimbabwe’s, which is faced with the challenge of restructuring for greater efficiency and
attracting investment for economic growth, this is particularly important. Consequently, ways of
improving the efficiency and effectiveness of boards of SEP’s should continue to be investigated
in the context of corporate governance, to lessen the burden on taxpayers and to ensure that the
public obtains maximum benefits from the entities www.zimbabwesituation.com Accessed 13
July 2018. Establishing the causes of the ineffectiveness of boards and providing possible
solutions to the existing challenges was one of the key aims of this study.

1.3 Statement of problem

Most SEP’s, in general, have been operating and performing below par as compared to the
expectations of the government and general stakeholders for a while now. Hence, board
composition and tenure of these public entities have come into question as a result of their
decline in performance in recent years. A number of corporate governance initiatives such as the
public entities Bill (2017) were introduced to govern the operations of SEP's and their boards.
This public entities bill states that certain regulations should be observed when the line minister
appoints a board member, for example, no member should be appointed for a term longer than
four years and also a person should not be appointed to the board of the public entities if he or
she is a member of two other such boards.

6
The role of public entities boards are critical to performances of SEP’s hence board composition
and tenure of these boards becomes very vital to the general performance of SEP’s.
Unfortunately in Zimbabwe at the moment, SEP’s board composition are characterized by
political appointments instead of meritocracy. Also, board members serve long terms in one
board than what is required by the law. More so, there has been a system of reshuffling same
people in different public entities boards without injecting fresh minds in the system and also
these board members tend to sit on more than three boards as required by the regulations.
Although substantial research has been undertaken on the effectiveness of boards of private
enterprises, inadequate attention has been given to the challenges being faced by boards of SEP’s
in effectively discharging their duties and promoting good corporate governance especially in
developing African countries. Furthermore, there has not been much meaningful research on the
effectiveness of boards of SEP's in Zimbabwe. It is also questionable whether research results
obtained from other regions or countries can be extended and applied without further
investigation to Zimbabwe given the differences in the country contexts.

It was very crucial for the researcher to analyze and evaluate the effectiveness of boards'
composition and tenure in promoting better performances in Zimbabwe's SEP's. These entities
are of significant importance to the national economy for the role they play in socio-economic
transformation, employment creation, and economic growth. This research particularly focused
on board composition factors (Gender, Age, Experience, Expertise, and Policy) and how they
can be aimed at enhancing the effectiveness of boards of SEP's in Zimbabwe with a view to
establishing greater performance and sustainable growth.

1.4 Research objectives

The objective of the study was to examine whether board composition & tenure had any effect
on corporate performance of state enterprises and parastatals in Zimbabwe.

The specific objectives include;

 To explore the relationship between board experience and profitability.

 To examine the relationship between board policy and service delivery.

 To evaluate the relationship between board expertise and contribution to GDP.

7
  To determine whether ages of board members had any effect on organizational
efficiency.

 To find out whether there was any relationship between gender and organizational
effectiveness.

1.5. Research hypothesis

The outlined theoretical framework tests the following:

H1: There is a positive relationship between board experience and profitability.

H2: There is a positive relationship between board policy and service delivery.

H3: There is a positive relationship between board expertise and contribution to GDP.

H4: There is a relationship between ages of board members and organizational efficiency.

H5: There is a positive relationship between gender and organizational effectiveness.

1.6 Significance of the study

1.6.1 To theory
In Zimbabwe few studies have been carried out on the effectiveness of board composition on
SEP’s performance, mostly it has been about corruption and mismanagement of SEP’s boards.
Also, it has been about corporate governance conduct of public entities which did not have an
indepth information on board composition and tenure, hence the researcher seeks to fill this gap.
The research provides indepth information and insights on board composition and tenure on how
it affects SEP’s performance within the Zimbabwean context. In Zimbabwe other scholars such
as Mandaza (2014) they carried out researches on SEP’s in Zimbabwe but their main focus was
on assessing the transparency and accountability in SEP’s boards. However, this research might

8
contribute to the literature that might assist the government administrators and the general public
in Zimbabwe and other developing countries to appreciate the major causes of poor board
composition in the public entities boards.

1.6.2 To practice
This research should be of interest to government administrators and the general public who have
a vested interest in the assets and overall performance of SEP’s. The results from this study
might influence the formulation of policies for the enhancement of efficiencies and corporate
governance structures in public entities in Zimbabwe and in other developing and neighboring
countries. It was hoped that this research might contribute to the debate on interventions required
by Zimbabwe and other developing countries to accomplish the objective of enhancing the
effectiveness of boards in promoting good corporate governance and performance within SEP's.
In particular, the research may assist policymakers, legislatures, board members, and other
scholarly researchers. The policymakers could be assisted to create policies on the future
direction of corporate governance reform in public entities. The legislatures might be assisted to
develop laws and regulations which might capacitate directors to effectively discharge their
duties and improve the compliance of SEP’s with good corporate governance practices. The
boards of SEP's might benefit from the research in that they may be enabled to better understand
and handle the challenges they encounter when performing their duties. Lastly, other scholarly
researchers may build on the findings of this research and expand to cover other aspects of SEP's
that need attention other than the inefficiency of boards.

9
1.7 Conceptual framework

Source: Researcher’s own conceptualisation

1.8 Assumptions of the study

This research had the following assumptions:

 A sample of ten public entities and selected participants were a fair representation of the
public entities in Zimbabwe, considering the fact that most public entities are governed
by the same framework and regulations.

 cost economic factors, constant.

 All public entities have clearly defined boards.

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1.9 Delimitation/ scope of the study

1.9.1 Theoretical scope

Major areas covered included among others: components of board composition which included;
experience, gender, policy, age, and expertise. In addition, the effects on SEP’s performance
namely; contribution to GDP, service delivery, profitability, organizational efficiency and
effectiveness was also covered.

1.9.2 Time scope

The research covered the multicurrency period in Zimbabwe that is from 2010 to 2017. This
enabled the researcher to make a consistent comparison in performance of the SEP’s during the
time of “stable” economy.

1.8.3 Geographical scope

The research was conducted in Harare, where all head offices of the state enterprises and
parastatals and ministries in Zimbabwe are located. The area was selected because that was
where respondents with adequate information about the study were available.

1.8.4 Methodology scope

In seeking to understand the effectiveness of board composition and tenure on SEP’s
performance, a quantitative approach was used to provide empirical evidence. This approach was
preferred because it allowed the researcher to draw inferences about cause and effect.
Furthermore, in quantitative research, numerical data is used to deduce facts from theory. Data in
quantitative research was gathered from a natural setting in the field through circulation of
questionnaires to some key stakeholders in selected SEP’s and surveys.

In Zimbabwe, there is a total of 107 SEP's and from that population, the study drew a sample of
120 respondents which was chosen from 20 SEP’s. This sample of 20 SEP’s represented the
performance of all public entities since all SEP’s use the same corporate governance framework.
The respondents were categorized as representatives of parent ministry, Senior Managers or
employees of SEP’s, CEO’s (or representatives) and other stakeholder representatives.

11
1.10 Limitations of the study
Like any other research, this research had its own limitations which are

 The researcher faced challenges in accessing relevant and in-depth data (scarcity of data)
due to low response rates and this could limit the richness of the data to be used for
analysis. Therefore the researcher requested a letter from the university that proves the
legitimacy of the research.

 Secondly, the majority of empirical studies examining the effectiveness of boards of

public entities have relied on data obtained from developed nations. It is therefore
doubtful whether these results can be directly extended and applied to developing
markets such as Zimbabwe. This gap motivated the researcher to carry out this research.

 It could be possible that the research would have other data limitations owing to inherent
deficiencies of questionnaire and surveys. However, the researcher did everything
possible to eliminate those deficiencies when designing the questioners’.

1.11 Definition of key terms

Board composition refers to the number and the type of board members, board demographics,
board structure, board education and evaluation, and board leadership.

Board tenure is defined as the average number of years of all outside directors serve on the
board of an organization.

Effectiveness is the degree to which something is successful in producing the desired result.

SEP’s: State-owned Enterprises and Parastatals.

1.12 Chapter summary

This chapter was a foundation of the research as it was mainly introducing the domain of the
study, looking at the background that has caused interest to the study. The chapter also
highlighted objectives to be achieved by the study. More so, this chapter looked at other
components of the study such as the problem statement, research questions, hypothesis, and
significance of the study and scope of this research. Chapter two mainly analysis and reviews
literature on similar topics. Chapter three explains the research methodology. Chapter four, looks

12
at the findings, through data gathering by use of questionnaires, and desktop research. These are
analyzed and interpreted using tables and graphs. The last chapter, chapter five gives conclusions
and recommendations for further study.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This “chapter examines and exploits a number of studies which have been done on the subject of
board composition issues including definition, components, concepts, principles and other
approaches. It brings the picture of theories and tries to compare them and finally comes up with
a conceptual framework so as to establish a relationship between board composition and tenure
systems and the performance of state enterprises and parastatals in Zimbabwe.”

2.2 Theoretical literature review

2.2.1 Overview of corporate governance

.The Zimbabwean “Corporate Governance Framework (2010) defines corporate governance as
“a set of processes, customs, value codes, policies, laws and structures governing the way a
corporation is directed, controlled and held accountable”. The history of governance has been
characterized by tensions between ownership and control (Stuart, 2005). Kendall and Kendall
(2008) maintain that governance issues arise whenever a corporate entity acquires a life of its
own that is, whenever ownership of an enterprise is separated from its management.
Shakespeare’s Merchant of Venice illustrates a classic case of ownership and management
tensions, as at this stage of evolution, corporate governance practices were already in sight,

13
considering how the oversight role was exercised over those delegated with the task of running
the venture (Tricker, 2000). Similarly, King (2002) maintains that corporate governance has been
practiced for as long as there have been corporate entities and yet the study of the subject is less
than half a century old. The argument goes on to suggest that the term ‘corporate governance’
was scarcely used until the 1980s. This line of argument is supported by Tricker (2000) who
indicated that the twentieth century had seen massive growth in serious management thought, but
that corporate governance was until recently, overlooked.”

In a “similar vein, Morck & Steier, 2005) argues that major institutional changes require major
disruptions, such as wars or disasters which weaken the elite sufficiently enough to interrupt its
control of state. One critical historical moment was the Great Depression of the 1930s, when
different countries set in different directions shaped today’s differences in corporate governance.
Such crises activated different responses in different countries. For example, in Sweden the
effects of depression led to social democracy, in Germany, National Socialism and in Italy,
Fascism (Morck & Steier, 2005). The merit of this argument is that corporate governance is an
important determinant of economic power and thus a key plank of reform in many political
ideologies.

Tricker et al. (2000) also asserts that important theoretical and practical dimensions have been
developed for the management of finance, marketing, operations and other aspects of the modern
organisation, yet little concern has been shown for the role of the Board of directors. The
argument is extended to other branches of management, such as strategic management, that also
assumed prominence without clearly positioning or articulating the role of the Board. King
(2002) maintains that although the theoretical exploration of the subject is relatively new, the
practice of corporate governance is ancient. Tricker (2000) drew attention to the importance of
the link between organisation, environment and board composition. Three other significant
developments occurred in corporate governance thinking: i) in the United States of America
(USA), with the emphasis on independent outside directors and audit committees; ii) in Europe,
with the declaration of the two-tier Board; and iii) on both sides of the Atlantic, in debates about
stakeholder notions.”

14
According to Cheffins (2015), “shareholder passivity created latitude for top executives of U.S.
public companies. Cheffins (2015) further argues that it was only in the 1970s that debates in the
United States about managerial accountability, Board structure and shareholder rights began to
be explicitly channeled through the term “corporate governance.” The 1970s also saw a
questioning of the role of the major corporation in society. Broadly, the argument was made that
public companies have responsibilities beyond their strictly legal duty to their shareholders

It has been argued that the director’s responsibility to increase shareholder value was reinforced.
The profit-performance model became the basis for the privatization of state-owned enterprises
in sectors such as rail, coal, electricity, gas and water in the United Kingdom and, gradually,
around the world (OECD, 2005). The debate on privatization has a number of theoretical
underpinnings, the profit model being one of them, with serious implications for the Boards in
terms of performance as it became apparent that performances in most state-owned enterprises
were poor (Wiersema, 2003).

In the United Kingdom, the report of the Committee chaired by Sir Adrian Cadbury (1992) on
the financial aspects of corporate governance majorly influenced thinking about corporate
governance. The Cadbury Report as it was later known played a significant role in influencing
thinking around the world. Other countries followed with their own reports on corporate
governance. These included the Vienot Report (1995) from France and the King Report (1995)
from South Africa. As with the Cadbury Committee Report, these reports focused particularly on
the potential for abuse of corporate power.

Similarly, they called for greater conformity and compliance at Board level, recommending the
use of audit committees as a bridge between Board and external auditor, the wider use of
independent outside, non-executive directors, and the separation of the role of chairman of the
Board from chief executive (Nadler and David, 2006). These reports thematically focus on”
checks and balances to avoid executive domination of decision-making, and to protect the rights
of shareholders, particularly minority shareholders.

2.2.1.1 Essential principles of corporate governance

As Cheffins (2015) “points out those concepts such as efficiency, effectiveness, transparency,
accountability, monitoring and evaluation are synonymous with the disciplines such as

15
Management, Economic and Finance. Corporate governance concerns the way in which entities
are governed, managed and held to account. Therefore, concepts such as responsibility,
transparency, accountability, monitoring and evaluation of the resources are inextricably linked
with corporate governance (Nadler and David, 2006).

Accountability serves as an alignment measure between the principal’s expectations and the
agent’s delivery (Fuller, 2003). This means that those entrusted with the public goods or entities
must display responsibility when performing their functions. According to Cloete (2006), their
conduct should be beyond reproach so that they will be able to account for their acts in public.
McGee (2002) argued that accountability also involves constructing suitable systems that allow
for decision-making in a context that promotes honesty and productivity. Accountability is
therefore a personal obligation, not only of the appointed departmental accounting officer, but of
all other officials as well. Each public office bearer is expected to display a sense of
responsibility in executing his/her official duties and even beyond that, namely to display
absolutely irreproachable ethical behavior (Gildenhuys, 2003).”

Corporate governance raises fundamental questions about the purpose and practice of the public
service organization. SEPs such as the ZBC and ZESA are questioned in serving the interests of
the broader public with respect to educational programming which entrenches democratic values
and providing a source of energy for growing the economy, respectively (Chavanduka et al,
2014). Serving the country via the Constitution means that accountability forms the bedrock of
good governance. SPEs’ activities such as the shareholder compact and strategic plans also make
reference to ‘good’ governance. In the context of the legislative and regulatory frameworks,
good governance refers to compliance requirements as expected by the National Constitution
(Nadler and David, 2006).

2.2.1.2 International initiative s on corporate governance

Globally, “it has become well established that, to strengthen companies, be they private or public
entities, there must be continuous investment of capital and human resources as well as customer
satisfaction and public confidence in the entities (Cronin et al, 2012). To be able to attain these

16
objectives, companies need to do more than just create a track record of producing goods and
services and having a reasonable market share, but must have good and effective management
and be perceived to be properly governed. Proper corporate governance is globally considered as
a very important tool to achieve these aims. The realization of the importance of corporate
governance for the socio-economic development of countries has motivated a number of
initiatives, at national and at international levels, aimed at responding to the corporate
governance challenges worldwide.

At national level, a number of countries have come up with reforms to prevent the occurrence of
further corporate collapses and improve corporate governance practices. Internationally, these
initiatives are being spearheaded by multilateral organizations including the World Bank, among
others (World Bank, 2009). The World Bank regards corporate governance as an essential tool in
supporting international financial structures, creating a favorable investment environment for
developing countries to have access to capital and eliminating corruption in both the private and
public sectors. In furthering efforts to promote good corporate governance practices, the World
Bank partnered with the OECD to put together a far-reaching international co-operation
framework. The co-operation between the World Bank and the OECD is structured along two
major initiatives: a Global Corporate Governance Forum (GCGF) and a series of Regional Policy
Dialogue Round Tables.(Nestor, 2010)”

2.2.1.3 Corporate Governance in SEP’s

Universally, it “is considered a government’s responsibility to deliver, inter alia, basic services
such as education, health, policing, water, electricity and sanitation to their citizens. These
services are offered either directly by departments and ministries or through public entities or
state-owned enterprises. Public entities were incorporated in most countries to facilitate and
accelerate economic and social development. (OECD, 2005) However, increasing evidence
indicates that most public entities in developing countries do not contribute strongly to this
development because they perform their functions ineffectively resulting in huge losses,
budgetary burdens and poor products or services. As a result of the poor performance by public
entities, policy makers and other interested stakeholders have engaged in continuing debates. The

17
debates were aimed at establishing the extent to which public entities contribute to economic and
social development, why so many of the entities have been unsuccessful to competently deliver
the services for which they were created and how their administration and governance can be
improved.”

In the “verdicts, it has been established that having an effective board is one of the key elements
to a successful public entity (Herman and Weisbach, 2013). According to Frederick,(2005) in
order to operate effectively, public entities should be adequately supervised by an independent
board which should put in place structures and procedures that ensure that the public entities
operate effectively, efficiently, accountably, and responsively in the public interest and that they
are contributing to national development. Despite the acknowledgement of the role played by
boards, empirical studies have established that the boards have not been as effective as they
should be in discharging their duties. Greater focus has thus been on establishing the causes of
the boards’ ineffectiveness and finding ways of improving their efficiency.

In pursuance of this objective, it has been established that some of the major contributing factors
to the poor performance by boards are: the scope and extent of government influence which has,
in practice, been extreme; (Vagliasindi, 2008) fewer qualified individuals available to serve as
directors, appointment of people for their political adherence rather than business expertise and
imposition of senior government or military officials who are not competent or sufficiently
experienced. The other factors include individual directors sitting on too many boards thus
diluting their capacity to monitor corporate events, poor board remuneration, lack of
transparency in the face of insufficient external scrutiny and no questioning of shortfalls in board
performance, among others (Vagliasindi, 2006). Thus the development of properly composed,
focused, adequately empowered, motivated and efficient public entity boards capable of greater
responsibility remains a significant challenge to corporate governance in many countries for the
predictable future.”

There are “both narrow and broad definitions of corporate governance. The most widely used
definition of Corporate Governance is "the system by which companies are directed and
controlled" (Cadbury Committee, 1992). More specifically it is the framework by which the
various stakeholder interests are balanced, or, as the International Finance Corporation (IFC)

18
states, "the relationships among the management, board of directors, controlling shareholders,
minority shareholders and other stakeholders".

2.2.2 Overview of state owned enterprises

The term state-owned enterprises or public entities refer to enterprises where the state has
significant control, through full, majority, or significant minority ownership (OECD, 2005).
Similarly, Shirley (2010) defines public entities to include entities that are expected to earn most
of their revenue from the sale of goods and services, have a separate legal identity, and are
majority-owned by government. Public entities provide goods and services that are not usually
provided by the private sector and profit maximization is not the sole basis for measuring their
efficiency.

Public entities have always played a critical role in the socio-economic development of many
countries. According to Nellis, (2014) after independence, most African governments inherited
the notion that extensive public sector involvement in the economy was the natural, proper order
of affairs (Mwaura, 2007). He argues that efficient and effective service delivery to the public is
a fundamental role of government. Thus, through public entities, governments have played a
leading role in the provision of essential goods and services such as water, electricity,
transportation, education and health in the urban as well as in rural areas. The entities have
therefore, been considered as important agencies for socio-economic transformation, creation of
employment and as instruments for economic empowerment.

However, the performance of many public entities has been below expectation. This has been
ascribed to various reasons, mainly weak corporate governance and unethical practices.(ZSEP,
2010). The governance systems in some of the public entities have been found to be
characterized with role ambiguity, ineffective boards, ineffective management systems and non-
adherence to statutes. The other challenge cited is that of multiple and conflicting objectives set
for these entities (Vagliasindi, 2008). Whilst governments expect public entities to operate in a”
commercially efficient “and profitable manner, they require them to provide goods and services
at prices below cost, serve as generators of employment, receive inputs from state-sanctioned
suppliers and choose plant locations based on political rather than commercial criteria (Nellis,
2014). The mixing of non-commercial or social with commercial objectives unavoidably leads to

19
political interference in the public entities’ operations to the detriment of managerial autonomy,
commercial performance and economic efficiency. These factors, among others, have
contributed to poor performance by some of the public entities. As a result, a number of
organizations and countries have come up with corporate governance principles and guidelines
aimed at indoctrinating a culture of accountability and transparency as well as efficiency and
effectiveness in the management of public entities.

2.2.3Board Composition
The board should therefore be structured and composed of in such a way that it will act to
monitor itself. Rashid (2011) states that “corporate governance literature debated within two
extreme streams of board practices examining whether the board composition in the form of
representation of outside independent directors and structural dependence of the board influence
the organization’s performance. The available literature on the relationship between the board
composition and firm performance reflects mixed results. The idea of endogenous relationship
between board composition and corporate performance was advanced by Hermalin & Weisbach
(2000), that is, board composition and corporate performance jointly influence each other rather
the board composition influencing corporate performance or corporate performance influencing
board composition. Davidson & Rowe (2004) note that board composition and corporate
performance influence each other but the effect is not immediate.

Murage (2010), in relationship between Corporate Governance and Financial performance of

parastatals in Kenya, concluded that large boards enhanced corporate performance and that when
such boards were dominated by non-executive directors, it enhanced firm value. While the CEO
duality did not significantly impact on financial performance measure of ROA, in his study, it
had a positive relationship with financial performance in conflict with other studies.

Board composition is essential to its proper functioning and effective performance. Most
corporate governance promoters acknowledge that board effectiveness is dependent on” a
properly “composed board in terms of diversity, experience, skills and judgments of individual
directors and the ways in which they relate as a board in seeking to accomplish organizational
objectives. According to Roberts et al, board effectiveness is related to the “degree to which non-
executives acting individually and collectively are able to create accountability within the Board

20
in relation to both strategy and performance”. This means that it is crucial for board members to
have interpersonal skills such as being able to work in a group and respecting each other’s views
if the board is to be effective (Frederick,2005).

The board members should also have skills and experience that enable them to significantly
contribute to debates and respond to the requirements of the company. Thus, the composition of
the board in terms of a suitable combination of skills, knowledge and experience for example
professional backgrounds and industry experience, board independence (ratio of executive and
non-executive directors), size and diversity has been considered important in enhancing the
effectiveness of the board. Although some empirical studies have found evidence of positive
links between the composition of the board of directors and the performance of an organization,
other researchers have argued that there is a negative relationship or no prominent relationship
between the composition of the board and the company’s performance. There has therefore, been
no agreed position as to the impact of the composition of the board on the performance of the
company either directly or through corporate activities thought to affect shareholder wealth.

Promoters of good corporate governance recommend that there should be a sufficient number of
independent non-executive directors on the board of directors to create a suitable balance of
power and prevent the dominance of the board by one individual or by a small number of
individuals. The other reason put forward in support of the recommendation is that a board
composed of a majority of non-executive directors is more effective in that it is able to act in
shareholders’ best interests, critically review management proposals and control management
decisions as the directors are not directly affiliated with the management. In addition, non-
executive directors provide the company with opportunities to link with the outside world,
thereby assisting it in securing essential resources and expanding networking (Turnbull, 2011)

Some commentators such as Bhagat et al (2002) have argued that boards with diverse members
in terms of skill, gender and experience are better able to respond more rapidly to the challenges
of an uncertain and dynamic business environment. More so, Bhagat et al (2002) argued that”
diversity “enhances the board’s flexibility in its decision-making process due to a wider set of
perceptions and views as well as unique and different experiences. Accordingly, a large and
diverse board is better able to initiate and implement more extensive policies, strategies,
activities and projects (Barinaga, 2002). In support of this view, (Clarke, 2012) suggest that the

21
size of the board increases with the complexity and diversity of the company, hence large boards
may be appropriate in complex and large corporations where more resources and expertise are
required to maintain sufficient contacts with the external environment. Moreover, a small board
has the disadvantage that it may be easily manipulated by the chief executive officer (Clarke,
2012).

On the other hand, (Turnbull, 2011) have suggested that large boards can be less effective than
small boards because small boards provide a greater opportunity for each director to contribute
substantively to the discussions and the decision-making processes. Turnbull (2011) main
argument was that while the board’s capacity to monitor performance may be enhanced if the
number of directors is increased, the benefit may be outweighed by the incremental cost of
poorer communication and bureaucratic processes associated with larger groups. In addition,
Cohen et al (2003) argued that a large board encourages laxity and free-riding among directors
as far as the monitoring of the public entity’s strategy implementation and effectiveness of
management is concerned. Thus, it has been found that limiting its size may improve board
effectiveness. The above contradictory arguments are a clear indication that there is no
prescribed right or optimum size of a board, but that the board size should be determined by the
specific needs of the organization (Cox, 2001). It seems that the number that is popularly
considered sufficient for a public entity board to be effective is between six and ten as shown in
the statutes creating some public entities.

In addition, Especial management expo (2008) support the view that, given the current dynamic
global business environment and the emergence of greater power being assigned to a wider set of
stakeholder groups, greater demographic diversity amongst members of corporate boards may
lead to improvements in a company’s performance. In particular, one demographic characteristic
that has been recognized as beneficial to the company is the representation of women on boards
(Fraser et al, 2009). Unfortunately, similar to the above aspects, research findings on the”
relationship between the percentage of women on boards and company performance have also
been rather conflicting (Turnbull, 2011).

22
2.2.3.1 Fundamentals of an effective board
The primary “task of the Board is to ensure that management is acting in the interests of the
shareholders, through an advisory and monitoring role (Vagliasindi, 2008). According to Fuller
(2003) frequently, regulations stipulate several conditions related to the number of directors,
such as their type (e.g. executive, non-executive and independent directors) and skills of the
appointees.

As Vagliasindi (2008) points out that there are three areas where the searchlight of review might
be directed: participation, process, and performance. Participation examines the involvement of
the individual Board member. By law, Board members have fiduciary responsibilities, that is the
duty of care, the duty of loyalty, and various other duties which they are expected to discharge
(Vagliasindi, 2008). Gordon et al (2004) proposed that process and system evaluations are
concerned with how the Board and its committees operate, the role played by the chair, and the
support provided to the Board by staff. In this context, the role of the Board chair, or executive
committee, in formulating the Board's agenda must be looked at as well as the Board’s focus on
issues related to its governance responsibilities (or conversely, its time consumed with side
issues or staff briefings "for information”) such as age and number of Boards in which directors
sit are also recommended in the Issues of whether the Board receives the information it requires
to monitor performance at a strategic level, and whether this information is presented in a form
that can be easily understood, so as to provide a good basis for decision-making, must also be
considered. System evaluation relate also to the organization's governance system, for example it
includes issues such as whether committees, task forces have clear terms of reference and how
they report to the Board (Gugler, 2007). Also Gugler (2007) indicated that the Board should also
have governance policies for topics such as conflict of interest, the role of the chair or external
communication and adherence to relevant bylaws. Finally, performance is concerned with the
results or outcomes of Board activity, this is where judgment is particularly required, as the
issues are complex (John and Senbet, 2011). Gugler (2007) also indicated that evaluation would
require assessing whether the Board contributes effectively to the formulation of the”
organization’s “vision and strategy and performing its risk management role and financial
oversight, including the capacity to handle an unexpected crisis if one arises.

23
In an effort to find possible solutions to improve the efficiency and effectiveness of boards of
public entities, this study examines five elements considered vital to an effective board. The
selected elements are role, selection and appointment, composition, remuneration and evaluation
of the board. The selection of the critical aspects was based on previous research which
identified them as the major components of board effectiveness (John and Senbet, 2011). It is
important to note that it is beyond the scope of this thesis to discuss these elements in detail.
Only certain aspects of the elements, as they relate to the effectiveness of boards of Zimbabwean
public entities, are focused on. In addition, the general enforcement mechanisms put in place to
encourage compliance with good corporate governance are examined and their effectiveness
reviewed (Vagliasindi, 2008).

2.2.3.2 Role of the board

Corporate governance must be evaluated not only in terms of rights, but also in terms of duties
and responsibilities. As an example, shareholders and the board are expected to perform certain
duties in the accomplishment of company objectives. The shareholders contribute to corporate
governance by virtue of their obligation to appoint the directors and the auditors and to satisfy
themselves that an appropriate governance structure is in place (Fernando, 2010). The
shareholders also have a duty to behave responsibly by attending general meetings, voting, and
exercising their authority within the organization. After appointing the directors, the shareholders
expect the former, particularly executive directors, to carry out the day to day management of the
company and to ensure that the company observes good corporate governance. (Colley et al,
2013)

The extent of the power exercised by and the legal responsibilities of directors vary with the
nature of the organization and the jurisdiction within which it operates. In the past, directors’
duties in many common law jurisdictions were owed almost entirely to the company and its
members, and the board was required to carry out its duties for the financial benefit of the
company (Davies, 2012). However, recently efforts have been made to provide for more scope
for directors to act as good corporate citizens by considering a wide range of other” stakeholders’
interests “and the impact of their actions and decisions on the societies and environments in
which they operate. The directors should thus, whilst seeking to maximize profit for the

24
company, exercise their duties in the best interests of the company, all other stakeholders and the
environment (Vangliasindi, 2008).

In most common law countries, directors are subjected to various duties which include statutory
and common law duties. In undertaking these responsibilities, directors are bound by a fiduciary
duty and a duty of skill, care and diligence to the company. In a number of jurisdictions, the
common law directors’ duties of care and skill have become more stringent over time and have
been codified in company legislation. The fiduciary duties include the duty to prevent a conflict
of interests, not exceed the limitation of their powers, maintain an unfettered discretion and
exercise their powers for the purpose for which they were conferred. A director’s fiduciary
obligation entails that he should undertake his duties in good faith and in the interests of the
company. When a director acts in the company’s interests, he should exercise whatever skill he
has with the reasonable care expected from a person of his standing (Browne, 2012)

Furthermore, a director is prohibited from using his corporate position for personal gain or profit
and from acting ultra vires his powers. Therefore, directors are obliged to act both within the
powers of the company as well as within their fiduciary duties to the company. But, it is
important to note that ordinarily, directors do not work individually. They act collectively as a
board although they are empowered to delegate their powers to individual directors, a committee
of the board, an officer of the company or competent specialists

2.2.3.3 Selection and appointment of board members

The performance of an entity depends largely on the capabilities and performance of its board. It
is therefore, imperative that the appointed directors should have relevant qualifications,
background, experience, integrity, diverse skills or specialized knowledge to effectively
contribute to the organization’s business growth. The directors should be able to relate well with
all stakeholders and have the ability to translate their knowledge and experience to the benefit of
the organization in which they would have been appointed. Recent corporate governance codes
specify numerous conditions related to appropriate number of directors, diversity in terms of
gender and race, their type, requisite skills and recommended restrictions on factors such as age”
and “the number of boards on which directors should sit. Also, the different codes have strongly

25
advocated for increased transparency in the selection and appointment of board members of
public entities (Vagliasindi, 2008).

Mwaura (2007) found that, in a number of developing countries, transparent selection of

competent board members and creation of effective boards may not be easily achievable. This
has been found to be mostly as a result of the absence of specific guidelines for the identification
and selection of directors and political interference in the board appointment process (Mwaura,
2007). Harris et al (2004) articulated that in the majority of cases, public entity boards are
occupied by people chosen for their political loyalty rather than business expertise, for example,
senior government or military officials who do not possess relevant qualifications, appropriate
technical or commercial skills and experience. The same civil servants normally sit on too many
boards thus weakening their capacity to learn the intricacies of the business as well as attend to
and monitor corporate events (Harris et al, 2004). To worsen the situation, sometimes the
appointed board members end up seeking to protect the interests of their ministry or government
thus weakening the public entity’s corporate governance as well as negatively impacting on the
effective implementation of the public entity’s strategy and fulfilment of its mandate
(Mwaura,2007).

The other established challenge by Hoshi and Kashyap (2011) has been that, in some cases,
skilled persons are not willing to be appointed to public entity boards because of the excessive
interference by governments in the operations of the public entities which renders the board
ineffective and also for fear of the reputational damages associated with being a board member
in a poorly performing public entity. The refusal by some professionals to be appointed as public
entity board members exacerbates the already existing challenge in most countries of limited
numbers of people who qualify to be board members (Okeahalam and Akinboade, 2003)

2.2.3.4 Board quality

This is the general standard or grade of what makes a director’s eligibility to sit on the board
(Hubbard, 2013). Clarke (2004) mentioned that the code emphasizes quality of board
membership, that is, organizations are required to be headed by an effective Board composed of
qualified individuals that are conversant with its oversight functions. Hubbard (2013) also”
emphasized “that, only people of proven integrity and who are knowledgeable in business and

26
corporate matters are required to be on the Board. More so, regular training and education of
board members on issues pertaining to their oversight functions are to be institutionalized and
budgeted for annually (Bedard et al, (2004). There are studies that have provided evidence
regarding this position. Studies like, Beasley et al, (2000) posit that, the board of director’s
ability to monitor and advise a firm is affected by its influence, competence, incentives, and
involvement. This positively affects performance by reducing high earnings management,
restatements, and fraud.

2.2.3.5 Board size

In relation to a relationship between the size of a board and a firm’s performance, there are two
distinct schools of thoughts. The first school of thought argues that a smaller board size will
contribute more to the success of a firm (Hermalin & Weisbach, 2003). However, the second
school of thought considers that a large board size will improve a firm’s performance (Coles et
al, 2008). These studies indicate that a large board will support and advise firm management
more effectively because of a complex of business environment and an organizational culture
(Mansi & Reeb, 2004). Moreover, a large board size will gather much more information. As a
result, a large board size appears to be better for firm performance (Adam & Mehran, 2003).

Anderson et al (2004) posit that boards with a large number of directors can be a disadvantage
and expensive for the firms to maintain. Planning, work coordination, decision-making and
holding regular meetings can be difficult with a large number of board members (Hermalin &
Weisbach, 2003). The effectiveness of the board does not depend on how many directors sit on
it, although a minimum number of directors with adequate experience and knowledge are vital to
ensure tasks are carried out efficiently (Anderson et al, 2004). Based on Hermalin and
Weisbach’s research ( 2003) larger boards may create free rider problem among directors and
the possibility of a lack of cohesiveness with larger boards

2.3 Components of board composition

The traditional understanding of board composition is through the paradigm of discrimination
and-fairness, both through programs such as affirmative action - attempting to select from
underrepresented groups - and through a numbers-based approach where statistics are the most”
important “tool (Jamali et al, 2007). As looked at earlier in the study however, there are several

27
other aspects that need consideration, in assessing how board composition really is. Board
gender, age, expertise, and experience and board policy as determinants of SEP’s performance
are hereby discussed.

2.3.1 Board gender

According to Bohren and Strom (2010) gender composition in the boardroom and in top
executive positions has been the focus of public debate, academic research, government
considerations and corporate strategy for more than a decade now, with interesting but mixed
results. Previously considered a social issue and an issue of image, gender composition is
increasingly approached as a value-driver in organizational strategy and corporate governance,
and as such has become a challenging issue in recent academic research (Adams and Ferreira,
2009). Positive performance effects of board gender composition imply that a higher number of
women in corporate top positions or on board of directors will relate to increased firm
productivity and profitability (Marinova et el, 2010).

Examining the relationship between the percentage of women and minorities on boards of
directors and firm value, a significantly positive effect is also found by Carter et al. (2008).
Dwyer et al (2003) drew the attention to the moderating role of the firm’s strategic orientation
and organizational culture. Dwyer et al (2003) in their study of 535 US banks they found that
firms that focused on growth experienced positive performance effects from gender composition.
In addition, a positive association was observed to some extent in a clan culture context which is
characterized by core values such as teamwork and participation (Terjesen et al, 2009).
However, Terjesen et al (2009 posit that the performance effects of gender composition
appeared to be significantly negative within the setting of an adhocracy culture, which is
characterized by an external orientation and a focus on individuality and competition. More
negative results were seen in a recent panel study of top 1500 public US companies, where
Dezso and Ross (2008) found that having a female CEO had no positive effect on firm
performance, while female participation below the CEO level was positively associated with
firm performance for companies pursuing an innovation intensive strategy.”

28
Whereas “in the US study findings on the value of gender composition on firm performance are
predominantly positive, it is mixed results in Europe. Rose (2007) for instance used a sample of
Danish firms listed on the Copenhagen Stock Exchange during 1998-2001, and found that female
board representation had no impact on corporate performance. Smith et al. (2006) in a panel data
study of 2,500 of the biggest Danish firms showed that the share of women among top
executives and on boards of directors tended to have a significantly positive effect on firm
financial performance, controlling for firm characteristics, as well as for the direction of
causality. Furthermore, Smith et al. (2006) results revealed that the positive performance effects
were mainly accounted for by female managers with university education, and were also related
to female board members elected by the staff. Shaw and Carter (2007) found that organizations
with gender balance were motivated to perform better towards organization goal as women and
men compete favorably to deliver on their assignments.

Female board members are examined very often in empirical studies. The female board members
reflect a diversified characteristic of the board (Bohren and Strom, 2010). In addition; Smith et
al. (2006) considered three different reasons to recognize the importance of females on a board.
First, female board members usually have a better understanding of a market in comparison with
male members. As such, this understanding will enhance the decisions made by the board (Smith
et al, 2006) . Second, female board members will bring better images in the perception of the
community for a firm and this will contribute positively to firm’s performance (Smith et al,
2006). Third, other board members will have enhanced understanding of the business
environment when female board members are appointed. Moreover, Smith et al. (2006) also
indicated that female board members can positively affect career development of junior female
staff in a business. As a result, a firm’s performance is improved directly and indirectly with the
presence of female board members.

2.3.2 Board expertise

In the research of Yusoff and Fauzia (2010) they described board expertise as the individual skill
and knowledge of an individual board member, these could have developed from education and
various experiences. The combined skill and knowledge of members is an intangible asset of the
board and is a proxy that is associated with firm performance (Hillman and Dalziel, 2003).”

29
According to Igneley and Van de Walt (2001), the expertise of a board member is key in
decision making. For instance, oversight role can be successfully implemented if the board
members are qualified and experienced. Qualified and experienced board members are a
strategic resource and their experience and knowledge are found critical for performance
(Hansell, 2003). This is because the board members would ensure an effective board which
requires “ high levels of intellectual ability, experience, soundness of judgement” (Hilmer,
2008).

Arcot and Bruno (2006) and MacNeil (2006) suggested that quality board expertise will lead to a
well-performing state enterprises and parastatals which in turn result to a higher contribution to
the Gross Domestic Product. The only study with plausible identification that there is a positive
relationship between board expertise and contribution to GDP is Dahya & McConnell (2007).
They find improved operating performance for U.K. state enterprises to have a direct impact to
their GDP which previously had been deteriorating.

2.3.3 Board age

In a “study performed by Wegge et al. (2008), the effect of age composition upon firms
performance was examined. Reviewing previous studies on age and gender composition, they
found the familiar mixed results. A field study was then conducted on work groups amongst
some 4000employees in the public sector. Age heterogeneity improved the ability of groups to
solve tasks with high complexity. For groups working on simple tasks, however, age
heterogeneity increased the number of self-reported health problems - which in turn indicates
that groups of diverse ages should be utilized particularly for innovation or solving complex
problems (Dagsson, 2011).Wegge et. al (2008.) further explain some of the positive results of
age composition as being the result of extended job tenure of the participants.

According to Dagsson et al, (2011) the only empirical study of the relationship between age
composition on the board of directors and firm financial performance is McIntyre et al. (2007).
Their review of relevant literature on the role and function of the board particularly notes the
increasing use of organizational behavior theory to predict board function and improve board
processes. From this they argue that governance research should concentrate on “creating and

30
testing a theoretically sound model of Board effectiveness, rather than trying to relate team
attribute variables to firm performance.”

Age can be considered as a proxy for the extent of experience and risk-taking manner. Hambrick
and Mason (2004) suggest that youthful managers are more inclined to undertake risky
strategies, and firms with young managers will experience higher growth than their counterparts
with older managers. This can be understood since older managers tend to be more risk averse
and may be at a point in their lives at which financial security and career security are important
(Hambrick and Mason, 2004,), while younger managers tend to have higher ability to process
new “ideas, lower willingness to accept status quo, and less interest in career stability. In the
management and organization theory literature, Hermann and Datta (2005) indicate that younger
executives lead to higher levels of international diversification.

Indeed, Zvavahera & Ndoda (2014) provide evidence that older CEO or board chairman is
positively associated with higher financial performance but they also stated that Zimbabwean
parastatals boards should include young minds to achieve organizational efficiency. For instance,
Cheng et al. (2010) indicate that older chairperson in China have significant impacts on some
performance measures, namely ROA, cumulative returns, and abnormal returns. Older
executives tend to have richer experiences and practices, which accumulate into skill-based
competencies.

2.3.4 Board experience

It is argued that board members with a higher age average will have much more experience
compared to a younger age average. This experience is expected to positively contribute to the
better performance of a firm. However, older-age board member appears to be more aggressive
and dictatorial with decisions. These characteristics of board members may result in risky
decision making, which may undermine a firm’s performance (Johnson et al, 2012). Chavanduka
et al (2014) posit that a board with diverse experience is vital to the profitability of Zimbabwe
state enterprises and parastatals; hence it is vital for these organizations to ensure that boards are
well composed with adequate experienced members.”

31
In “addition, board members with a higher age average may face more limited pressures to a
changing business environment and this may hinder the implementation of more strategic
decisions. Even though there has been a conflicting view on the relationship between a board’s
level of experience and a firm’s performance, a theory on restrained resources considers that
board members with more experience will cope better within a business environment by working
well in a group which will contribute positively to a firm’s performance (Wegge et al., 2008).

2.3.5 Board Policy

The appropriate role of the board in formulating and implementing policies has been long
debated (Useem, 2003). While the literature has acknowledged the importance and need for
adequate board control and independence (Jensen and Zajac, 2004), both the contributions of
boards to policy and the desirability of such practice have remained topics of discussion (Daily et
al., 2003). During this decade, several US scholars and practitioners observed that boards were
rather passive in the wake of US corporate failures and that more strategic involvement was
necessary to restore public confidence (Vance, 2009). A growing theoretical debate was boosted
by Fama and Jensen’s seminal work, in which they distinguished between decision management
(i.e., initiating and implementing strategic decisions) and decision control (i.e., ratifying and
monitoring strategic actions). Huse & Solberg (2006) have viewed the potential contributions of
boards to policy as fairly limited because of their distance from day-to-day operations, the
presence of information asymmetries, and the need to remain independent. This is also supported
by Adams et al. (2010) who unveiled that there is an inverse relationship between company
performance and board policy. However, Cooper and Uzun (2012) vehemently challenge this
wisdom by arguing that board of directors policies can become a measure of commitment and be
able to effectively monitor management in many companies which will result in greater service
delivery.

2.4 Measurement of SEP’s performance

Performance measurement has been introduced in many public entities in order to ensure
transparency of public decisions and the use of public funds and to boost performance. But often,
such performance measurement practices give rise to speculative behaviors and generate”

32
perverse effects (Hans de Bruijn, 2002). There are various measures of organization’s
performance and some are discussed below.

2.4.1 Profitability
Traditionally, “the success of a company has been evaluated by the use of financial measures
(Tangen, 2003). Four useful measures of profitability are the rate of return on assets (ROA), the
rate of return on equity (ROE), operating profit margin and net income (Hansen and Mowen,
2005). Profitability measures the extent to which a business generates a profit from the factors of
production: labor, management and capital. Profitability analysis focuses on the relationship
between revenues and expenses and also on the level of profits relative to the size of investment
in the business (Hansen and Mowen, 2005).

A well designed and implemented board management with sufficient experience is expected to
contribute positively to the creation of a firm’s value or profitability of the organization
(Padachi, 2006). The dilemma in financial management is to achieve the desired trade-off
between liquidity, solvency and profitability (Lazaridis, 2006).The subject of corporate financial
performance has received significant attention from scholars in the various areas of business and
strategic management. It has also been the primary concern of business practitioners in all types
of organizations since financial performance has implications to organization’s health and
ultimately its long term survival. High performance reflects board and management experience,
effectiveness and efficiency in making use of company’s resources and this in turn contributes to
greater profitability, which will benefit the country’s economy at large (Naser and Mokhtar,
2004).

2.4.2 Organizational efficiency

The efficiency in the public sector could be compared with that obtained in the private sector
only when the objectives are identical; and even in this case it’s not fully comparable because the
public sector develops complex projects, which take into account not only the economic benefits
but also social problems (Stoian and Ene, 2003). When we speak of efficiency, most analysts
refer to the economic efficiency, taken from the private sector and subjected to analysis in the
public sector, in order to illustrate the so-called inefficiency of the latter. The efficiency in the”

33
public “sector must thus be seen as an amount between the economic efficiency and the social
environmental one (Brennan, 2006). Also, the time horizon for measuring the efficiency obtained
should be adjusted to the investment. Usually the private sector seeks the economic effectiveness
on a short-term (annual profit), while most public sector investments generate results over a
longer period of time, these future flows of efficiency are often ignored in the analysis (Ozawa,
2006).

In order to apply the measuring techniques of the efficiency from the private sector to the public
one its objectives must be measured quantitatively accurately, which is a rare situation. The
difficulty of measuring the efficiency in the public sector is largely caused by the inability to
quantify accurately the effects (outputs) because they are direct but also indirect due to the
externalities which they generate, but also due to the clear and accurate non-statement of the
objectives (Hall and Lobina , 2005). Financial efficiency measures the degree of efficiency in
using labor, management and capital. Efficiency analysis deals with the relationships between
inputs and outputs. Because inputs can be measured in both physical and financial terms, a large
number of efficiency measures in addition to financial measures are usually possible (Tangen,
2003).

2.4.3 Service delivery

Service delivery performance needs to be measured in both financial and non-financial terms
(Guiffrida and Nagi, 2005). The inability to translate delivery performance into financial terms
hinders managers’ ability to justify capital investment for continuous improvement projects that
are designed to improve delivery performance. Other advantages with measuring delivery
performance in financial terms are that it is easily understood and compatible through different
processes and stages (Gunasekaran et al, 2001). According to Theodoras (2005) one important
aspect of delivery performance is on time delivery. Bauer (2005) indicated that service delivery
is mainly determined by company policies which are formulated by board members. There is a
positive relationship between service delivery and organizational performance (Bauer, 2005).

According to Adams and Ferriera (2012) the importance of service delivery lies in the fact it is a
platform where board of directors obtain information and partake in decision making, the quality
of which has an impact on the performance of an organization. Core (2009) support this notion

34
in” their study where thy indicated that there is a positive relationship between service delivery
and board policies. Mandaza (2014) proposed that Zimbabwe state enterprises and parastatals
must make use of its board policy to sustain its continuity which will result in sustainable service
delivery and a better organisational performance

2.4.4 Organizational effectiveness

The “effectiveness is the indicator given by the ratio of the result obtained to the one
programmed to achieve. Peter Drucker believes that there is no efficiency without effectiveness,
because it is more important to do well what you have proposed (the effectiveness) than do well
something else that was not necessarily concerned (Drucker, 2001). The relationship between
efficiency and effectiveness is that of a part to the whole, the effectiveness is a necessary
condition to achieving efficiency.

According to Singh and Vinicombe (2004) the growth in the field of performance measurement
has increased the awareness and use of performance measurement systems in organizational
settings. Its popularity and "en vogue" status has led to the development of a variety of process
oriented measurement techniques (e.g., Six Sigma) and philosophies (Lean Enterprise) that are
commonly incorporated into an organization's effectiveness management and monitoring
systems (Singh & Vinicombe, 2004). Bonn (2004) postulate that although performance
measurement is an important aspect of planning and control within the organization, it is not able
to assert whether the measured performance is worthwhile or if performance is excellent or poor
thus as a result, the active use of organizational effectiveness as performance measurement
system can discourage experimentation, learning, and creativity among organizational members.
As such, performance measurement system is implicitly linked to the notion of diagnostic control
systems where actual performance and planned objectives are compared in an effort to correct
deviations from preset standards of performance (Henri, 2004). Farrel and Hersch (2005) found
that the highly ambiguous nature of social organizations characterized by multiple and
contradictory goals and objectives, diverse constituencies, and an increasingly complex,
turbulent, and interdependent external environment has stymied the development of a common
conceptualization of organizational effectiveness, hence his has created yet another barrier to the
advancement of serious evaluation in organizations.”

35
2.5 Empirical review of board composition effects on organizational performance
The debate of whether board composition in the form of representation of outside independent
directors may add value to the firm’s financial performance is widely covered in the corporate
governance “literature. Yermack (2006) stated that outside directors can freely evaluate
management’s performance and act to remedy inappropriate and unacceptable situations. Haniffa
and Cooke (2002) stated that outside directors may contribute both expertise and objectivity in
evaluating the manager’s decisions. It has been shown that the effectiveness of a board depends
on the optimal mix of inside and outside directors (Ferris et al, 2003). According to Smith et al.
(2006), the outside directors are more vigilant as they mainly focus on the firm’s performance,
may dismiss the CEO following poor performance to maintain their personal reputation as
directors.

Dalton and Daily (2009) stated that in the absence of the outside directors and the male
dominated board in one hand will get enormous powers and the board may abuse such powers;
on the other hand without the expertise of the outside directors, the board may not be effective.

Some authors have also found that there is no significant relationship between board composition
and firm performance (Bhagat and Black, 2002). However, available theory is scanty on the
determinants of optimal board composition (Weisbach, 2002). Hermalin and Weisbach (2003).

Board composition refers to the combination of executive directors (including the chief executive
officer) and non-executive directors in the board. Sometimes non-executive directors are
appointed from outside and they may not have any material interest into the firm also known as
independent directors. They are appointed due to huge qualifications, expertise and experience
and they may effectively influence the board’s decision and ultimately add value to the firm
(Fields and Keys, 2003).

It is important to understand the contributions of SOEs to the development of nations, especially

those that are still developing as this will highlight the need for proper corporate governance in
these institutions. It has been reported that SOEs account for 20 per cent of global investment
and 5 per cent of employment. Furthermore, SOEs in Africa produce 15 per cent of Gross
Domestic Product (GDP), in Asia 8 per cent and Latin America 6 per cent, in Central and
Eastern Europe the state sector also accounts for 20 to 40 per cent of overall output (Farrar,
2005).. These figures represent the significant contribution to development and the wellbeing of

36
SOEs in different parts of the world, proving that there still is a need to focus on the corporate
governance of these enterprises. Presently, some state-owned enterprises are among the largest
and fastest expanding multinational companies. A study conducted in 2011 shows that more than
20 per cent of the world’s largest firms are state-owned and that they come from 37 different
countries and their joint sales amounted to 3.6 trillion dollars in 2011. This represented more
than 10 per cent of the combined sales of the whole Forbes Global 2000 and is equivalent to 10
per cent of the world’s GDP thus exceeding GDPs of countries such as Germany, France and the
UK.”

2.6 Implications of the reviewed literature

The literature review has demonstrated that corporate governance is importance in enhancing the
performance of “firms both private and public and state owned enterprises. However it has been
acknowledged even with the strictest regulations there have been infringements in corporate
governance. It is therefore important to look at new approaches to corporate governance that
integrate existing theories and the subjectivity of social sciences.

Literature has also demonstrated that state owned enterprises face different corporate governance
challenges from private companies due to their varied roles. In Zimbabwe efforts have been
made to improve corporate governance in state enterprises and parastatals based on international
best practices. The following theoretical model will be used to analyses the relationship of
various factors on corporate governance on performance in state enterprises and parastatals in
Zimbabwe.

In Zimbabwe there are several factors that affect performance of state enterprises and parastatals.
These include the lack of clarity of the roles of the Minister and the Board in managing the
affairs of the parastatal or state enterprise. The political environment therefore has an impact on
the performance of state enterprises as Boards are appointed by the Minister and the CEO’s
appointment is subject to the Minister’s approval. Under these circumstances the independence
of the Board is questionable. Good corporate governance practices can help in clarifying roles
and ensuring independence of the Boards and ensuring they are professional and properly
constituted. The development of the Corporate Governance Framework for State Enterprises and

37
Parastatal shows the Government’s commitment towards improving their performance through
good corporate governance.

A number of factors of corporate governance have been selected and their impact on
performance of state enterprises in Zimbabwe will be analyzed taking into account the contextual
variables together with the control variables. A selection of performance variables that are
measurable will also be identified. The contextual variables, Economics, Politics, Technology,
Social and Ecological were not included in the model but will be considered for future research.

2.7 Chapter summary

This chapter defined board composition for purposes of this study, discussed its importance and
the value it adds to an organization. It also outlined some international corporate governance
developments, examined the crucial elements in ensuring an effective board and reviewed
mechanisms put in place by countries to enforce compliance with good corporate governance
practices. Four major areas were considered as crucial in improving board effectiveness, namely
its role, selection and appointment, composition and performance evaluation. These five aspects
were considered especially to ascertain how they should be structured and managed to enable the
boards of public entities to effectively discharge their duties. A conceptual framework was
developed to analyze the impact of independent, variables on the performance of state enterprises
and parastatals.”

38
 CHAPTER THREE

METHODOLOGY

3.1 Introduction
This chapter “will present the methodology applied for the study including the research design,
research philosophy, sampling, data collection techniques and tools, data analysis and research
limitations.

3.2 Research philosophy

The study used positivism paradigm to show how all the major variables of the research worked
together in trying to address the central research questions. Gill and Johnson (2010) noted that
positive approach is instinctively appealing in that it focuses on discovering observable,
measurable facts and regularities, and only phenomena that the researcher can observe and
measure which would lead to the production of credible and meaningful data. It therefore
allowed areas of interest to be studied through appropriate methods and using findings in a
positive way which is in harmony with the recognised value system. The researcher followed the
positivist paradigm used by Williams (2011) because it allowed the research problem to be
analysed and by so doing the solution was attained. Quantitative method was used to measure the

39
reality through empirical data, formal propositions, quantifiable measures of variables and
hypothesis testing.

3.3 Research design

Survey research design was used as the research methodology for this study. The nature of this
study allowed the researcher to employ the survey research design because of its low cost and
easy accessible of data or information. Angnus and Katona (2010) posit that survey research
design does not belong to any one field, rather it can be employed by almost any discipline.
Hence, the other main reasons why this research design was used is because in survey research
the researcher can select a sample of respondents from a population and administer a
standardized questionnaire to them (Zainal, 2007). Secondly, by employing the survey research
design, it is possible to collect data from large or small population.”

3.4 Population
The population consisted of 107 state enterprises and parastatals. For studies of large populations
it is necessary “to select a representative sample of the population whose characteristics can be
used as inference for the whole population. This was done for convenience, since it proved to be
time consuming and costly to study the whole population. According to Bless and Higson-Smith
(2000) a sample refers to the group of elements drawn from the population which is considered
to be representative of the population and in this case a sample of 20 state enterprise and
parastatals was used for the sake of this study. Strydon and Venter (2000) added that people are
interested in describing the sample as a means of helping them to explain some facet of the
population, thus in the context of this study a sample of 20 parastatals was considered to be the
true representative of the whole population. Strydon and Venter (2000) indicated that in most
cases a sample of 10% is sufficient for controlling sample errors. The study adopted the 10%
approach of measuring the sample size this research.

40
3.5 Sampling methods and techniques

3.5.1 Sampling techniques

The sampling method used in this study was the cluster sampling technique. Data was collected
systematically using a questionnaire as a data collecting instrument. Respondents were selected
from various state enterprises and parastatals. Since non-random sampling has certain
limitations, the study adopted the simple random sampling method. The sample was obtained by
assigning a number to each state enterprise and parastatal and simple random sampling was used
to select the clusters. This amounted to a sample of 20 state enterprises. Each organization was”
given 6 questionnaires “making a total of 120 questionnaires. Using the cluster sampling method,
clusters were identified from different groups or SEP’s stakeholders located in Harare. The
cluster sampling, method was used to minimize monetary and time resources. Teddlie and Yu
( 2007) note that cluster sampling occurs when the researcher wants to generate a more efficient
probability sample in terms of monetary and or time resources.

3.5.2 Sample size

There are a total of 107 state enterprises and parastatals in Zimbabwe and it was not possible to
carry out a survey on all of them. However, a sample size of 20 parastatals was used in this
study. The study targeted 120 respondents from a sample of 20 state enterprises and parastatals
which was drawn out of a population of 107 state enterprises and parastatals.

3.6 Data sources

Primary data and secondary data sources were used in this study. Primary data was mainly used
in this research whilst secondary data was used at minimal levels. Questionnaires were issued to
different state enterprises and parastatals stakeholders so as to obtain primary data for this study.
Secondary data sources such as extant literature which were relevant to the topic being observed
were also used.

3.7 Data collection instruments

There are a number of research instruments that a researcher can use to gather data depending on
the type of study, these include questionnaires, interviews, observation, case studies, and
41
participatory research (Saunders, 2009). This study utilized the questionnaire. A questionnaire
was developed and used as the survey instrument for the study. The questionnaire used for this
study was a pre coded structured questionnaire. The questions focused on board composition and
SEP’s performances.

3.7.1 Pre-testing of the questionnaire

A pre-test refers to a trial administration of an instrument to identify any flaws. When a
questionnaire is used as a data gathering instrument it is necessary to determine whether”
questions and “directions are clear to respondents and whether they understand what is required
of them (Polit and Hungler, 2005). The questionnaire was pre-tested with 4 respondents to check
whether the questions were clear but the responses did not form part of the study results.
Suggestions made for improvement, were incorporated in the final questionnaire which was
administered to the sample population.

3.8 Data collection method

3.8.1 Primary data collection

Primary data was obtained through a self-administered structured questionnaire which was the
most appropriate data gathering method for this study. A questionnaire survey was used because
it enables the researcher to obtain information from a population too large for observation
(Kapopoulos & Lazaretou, 2007). A structured questionnaire had the advantage that all
respondents reply to the same questions which made it easy to analyze and compare information.
In this particular study a questionnaire was easy to administer since the study population
comprised of institutions rather than individuals. Written questionnaires were also appropriate
because they provide written information which cannot be refuted or misrepresented.

A Likert scale was used since it is the most widely used approach to scaling responses in survey
research and the term is often used interchangeably with rating scale, or more accurately the
Likert-type scale, even though the two are not synonymous.

This study adopted the five point Likert scale which was used to allow all respondents to express
how much they agree or disagree with a particular statement. This five point Likert scale have
an advantage because they do not expect a simple yes or no answer from the respondent, but

42
rather allow for degrees of opinion, and even no opinion at all. Therefore quantitative data was
obtained using the five point Likert scale questionnaire, hence this meant that the data could be
analyzed with relative ease.

However, like all surveys, the validity of Likert Scale attitude measurement can be compromised
due the social desirability. This means that individuals may lie to put themselves in a positive
light. For example, if a Likert scale was measuring discrimination, who would admit to being
racist?”

Offering anonymity on self-administered questionnaires should further reduce social pressure,

and “thus may likewise reduce social desirability bias. All the questionnaires were physically
handed to the respondents. The respondents were given five days to respond to the questionnaire
and follow up telephone calls were made to remind them. Personal information was made
optional.

3.8.2 Secondary data collection

Secondary data was collected through the review of literature from books, journals, publications
and newspaper articles.

3.9 Data analysis and presentation techniques

3.9.1 Data Analysis technique

The completed questionnaires were scrutinized to make sure that they were completed as per the
instructions that had been issued to the respondents. Questionnaires used had been pre-coded and
the responses were entered on a Likert scale. Quantitative data collected under each research
hypothesis from the questionnaires was manually captured onto an excel spreadsheet then
entered in SPSS and analysed separately to provide answers to the original research hypothesis.
The data analysis was performed using SPSS package. The purpose of all analysis was to
summarize data so that it could be easily understood and so that it could provide the answers to
the original research hypothesis.

43
3.9.2 Data Presentation technique
Analysed data was presented in descriptive narrations, graphs, tables, scree plots and pie charts.
Most of the information gathered was first presented in tabular form before it could be analysed
and drawn into a graph or pie chart. This was done to make it easy to work with the information.
Every table or graph used in this study is self-explanatory, i.e. it is understandable without the
need to read the text that refers to it.”

3.10 Validity and Reliability

3.10.1 Validity
Validity is the degree to which an instrument measures what it is supposed to measure (Maree,
2012). “The researcher’s prior knowledge of the subject under research and secondary data were
used to assess the validity of data provided by the respondents. Comparative analysis of
responses from the different state enterprises and parastatals assured validity since there is given
similarities amongst them. The fact that most of the respondents know the researcher and that the
researcher has some knowledge of these entities reduced the tendency to give the wrong
information. There is also a threat to validity if the data is not collected from appropriate samples
and if data is collected using wrong instruments. The right questions also need to be asked in
order to come up with meaningful data.

3.10.2 Reliability
The research instruments used to measure data should be reliable. According to Saunders et al
(2003) reliability refers to the degree to which data collection tools will yield the same results
when repeated. The reliability of research instruments refers to the extent to which measuring
instruments contain variable errors that appear inconsistently from observations during any one
measurement by the same instrument (White, 2000). Threats to reliability include: observer bias;
observer error, participant error, and participant bias, hence the simplicity and clarity of
questions can also reduce the temptation to give wrong answers (Leedy & Ormrod, 2010). The
pre-testing of the questionnaire was meant to ensure that the questions were clear and easy to
respond. Gibbs, (2007) posit that reliability of data is measured using the Cronbach alpha
coefficient and if a higher index of 0.5 and above is found then it indicate a highly reliable data
collection and low index which is below 0.5 indicate a poor or unreliable data collection.

44
3.11 Ethical considerations
As Merriam (2002) has pointed out, “good research” is conducted in an ethical manner. Ethical
considerations in research on human subjects are important to protect the rights of the
respondents. This requires diligence and expertise on the part of the researcher. To ensure that
the respondents were not constrained in terms of releasing sensitive information, and given the
recent topical issues of salaries of CEOs of state enterprises, the questionnaire was administered”
directly to the individual and not to the head of the organization concerned. This also ensured
that the respondent’s identity was protected. The key ethical issues considered were consent and
confidentiality. “The researcher took pains to explain the purpose of the study in order to assure
the respondents that the information was not going to be used for any sinister motive and was
going to be kept confidential. The respondents were also told that they are free to refuse to
answer any question should they feel uncomfortable with it. The provision of the name of the
respondent was also optional to give further comfort to the respondent. What was of importance
to the researcher was the name of the organization.

3.12 Chapter summary

This chapter clarified the methodology which was used for the study. A survey research design
was used and secondary and primary data were collected. The population for the study was given
as 107 State enterprises and parastatals and the researcher adopted a statistical method suggested
by Strydon and Venter (2000) which indicated that a sample of 10% is sufficient, hence the
researcher came up with a sample of 20 state enterprises and parastatals. Justifications for ways
which were taken to ensure validity were given. Other methods of data analysis were
highlighted. Chapter 4 would look at analysis of data and presentation.”

45
46
 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.1 Introduction
This chapter compresses the examination findings and talk about these findings in accordance
with the research objectives of the investigation. The chapter consolidates general and cross
tabulation investigation through tables, diagrams, graphs, cumulative percent and frequency
distribution in presenting the results. The primary strategy used to extricate data was Categorical
Principal Component Analysis. The aim of this chapter is to give answers to the research
question at the same time providing the base to reject or accept the null hypothesis formulated in
chapter 1.

4.2 Overall response rate

The 120 questionnaires covered 20 SEPs organizations. The questionnaires were targeted to
workers of parent ministry, workers of SEPs, senior managers of SEPs, CEO (representatives)
and other stakeholders. Table 4.1 below shows the summary of the response rate from the
questionnaires circulated by the researcher.

Table: 4.2 Response Rate

Sample Size 120

Responded 115
Usable Questionnaires 114
Response Rate 95%
Source: Survey Data, 2018

Generally, the response rate was high due to several factors including persistent follow-up with
all the participating stakeholders.The initial respondents target for the sample was 120, this was
not achieved as planned. Although the researcher added a 7% non-response allowance so a total
of 129 questionnaires were distributed hoping that eventually, a respondents size of 120 could be
achieved after factoring non-responses. The non-response rate was added because literature
recommends between 5% to 7% allowance margin for non-response. However, upon reaching

47
the deadline date for the submission of completed questionnaire from participants, only 115
questionnaires were returned. A thorough analysis of the completed questionnaires revealed
several inconsistences and in some cases, incomplete answers. This led the researcher to discard
1 more questionnaire which was considered as unusable, thus giving an acceptable response rate
of 95%. Thus, only 114 questionnaires were eventually used for further data and presentation of
results upon which this study is based on.

4.3 Sample adequacy

The Kaiser-Meyer-Olkin (KMO) measure was used to check for sample adequacy. This measure
was considered obligatory bearing in mind that an inadequate sample yields suspicious
outcomes. In addition, the test was done as a prerequisite for authenticating the sample as
satisfactory to conduct a factor analysis. In addition to the KMO measure, the Bartlett’s test
which is often acknowledged as a consistency measure when testing large samples for sampling
adequacy was also used. However, the Bartlett test less reliable when testing small sample sizes
hence the use of the KMO measure with sampling adequacy ranging from 0.5 to I.

Table 4.3: KMO and Bartlett Test

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .603

Approx. Chi-Square 1294.490

Bartlett's Test of Sphericity Df 91

Sig. .000

48
The table above reflects a KMO value of 0.603 that is acceptable. The Bartlett’s test of sphericity
that has a significant value of 0.000 indicates that the there is enough evidence to proceed to
conduct further tests using factor analysis. The value indicates that we do not have an identity
correlation matrix or in other sense there is no scope for reduction. The value leads to the
rejection of the null hypothesis that we have an identity matrix.

4.4 Questionnaire reliability

Table 4.4 Reliability Statistics

Reliability Statistics

Cronbach's Alpha N of Items

.749 21

All the 21 variables which made up the questionnaire were tested using the Cronbach’s Alpha
test. Cronbach’s Alpha values range from 0 to 1. In this study a Cronbach’s Alpha index of
0.749 was obtained as is shown by the above table 4.4. This high index reflects that a highly
reliable data collection was used for the study. Gibbs (2007) suggest that Cronbach’s Alpha
values of 0.5 and above indicate a highly reliable questionnaire, thus since the questionnaire used
for this study have an index of 0.749 then it was considered to be a highly reliable questionnaire.

4.5 Demographic statistics

Out of the 114 respondents from the whole sample survey 75 were female and 39 were male. The
gender sharing of the sample population was not subjective to a large scope by the need of the

49
researcher to attain an equal number of male and female respondents as well as the accessibility
and preparedness of the respondents to contribute in the research.

Table 4.5: Gender

gender

Frequency Percent Valid Percent Cumulative

Percent

male 39 35.0 35.0 35.0

Valid female 75 65.0 65.0 100.0

Total 114 100.0 100.0

4.5.1 Age of the respondents

The age group 55 and above years had the highest number of respondents with 55% of the
respondents, followed by the 45-54 years with 35% of the respondents, the 35-44 years age
bracket had only 10% of the respondents. This implied that the respondents were well
experienced and also well knowledgeable with issues of board composition and firm
performance.

Figure 4.1: Age of respondents

50
4.5.2 Education level

The study results revealed that 45.0% of the respondents had acquired university graduate level
of education as their highest level of education, while 40% had diplomas as their highest level of
education. It was further established that 10 % of the respondents had master’s degree education
certificate and 5% of the respondents had certificate of secondary education. These results imply
that majority of the respondents had at least a high school certificate and hence understood the
information sought by this study. The findings further supports the study of Dalton and Daily
(2009) showed that all the respondents were academically qualified and also familiar with their
duties and could dispense them effectively in terms of professional work ability and
performance.

51
Figure 4.2: Education level of the respondents

4.6 Analysis of results by hypothesis

The accompanying outcomes are exhibited around the objectives which are inter linked with the
five hypothesis expressed in chapter 1 of the study. The study used both descriptive and
inferential statistics to test data. The following hypotheses were tested:

52
H1: There is a positive relationship between board experience and profitability.

H2: There is a positive relationship between board policy and service delivery.

H3: There is a positive relationship between board expertise and contribution to GDP.

H4: There is a relationship between ages of board members and organizational efficiency.

H5: There is a positive relationship between gender and organizational effectiveness

4.6.1 Factor Analysis

Factor analysis is often used in data reduction to identify a small number of factors that explain
most of the variance that is observed in a much larger number of manifest variables. Any item
that failed to meet the criteria of having a factor loading value greater than 0.5 and loads on one
and only one factor is dropped from the study Wei et al. (2008). Components matrix in factor
analysis showed the components matrix before rotation. The matrix contained the loading of
each variable on each factor. Factor analysis was performed to test the validity of the model.
Factor analysis attempted to identify underlying variables, or factors, that explained the pattern
of correlations within a set of observed variables. Wei et al (2008) suggest that if the latent
variables explain 50% of the total variance in the explanatory factor analysis, hence the results
are deemed to be good results.

4.6.2 H1: There a positive relationship between board experience and profitability.
To test the hypothesis, data was analyzed through SPSS and is presented as follows

Table: 4.7 Principal Component Analysis: Board experience and profitability.

Total Variance Explained

Compon Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
ent

Total % of Variance Cumulative Total % of Variance Cumulative Total % of Cumulative

% % Variance %

1 2.788 55.764 55.764 2.788 55.764 55.764 2.492 49.837 49.837

53
2 1.155 23.104 78.868 1.155 23.104 78.868 1.452 29.030 78.868

3 .496 9.925 88.793

4 .344 6.874 95.666

5 .217 4.334 100.000

Extraction Method: Principal Component Analysis.

The table above present 2 critical components extracted out of the data using factor analysis to
test the above hypothesis. The outcomes of factor analysis show that there are 2 components that
explain the 78.868% of the total variance. This means that these 2 components have a major
contribution of 78.868% of the total variance. Hence this results are considered to be good
results as supported by Wei et al (2008). Confirmation of these outcomes are further co-operated
on Scree Plot on Figure below where it is clear that there are 2 components with eigenvalues
greater than 1.

Figure: 4.3: Scree Plot: Board experience and profitability

54
Table: 4.8 Rotated Component Matrix: Board experience and profitability

Rotated Component Matrixa

Component

1 2

BEP1 .897 -.027

BEP2 -.623 -.558

BEP3 -.039 .966

BEP4 .744 .454

BEP5 .863 .006

55
Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

From the table above, the Rotated Component Matrix shows the factor loadings for each variable
that is the component on which each variable loaded most strongly on. One of the sub variables
loaded strongly on component 1 with a factor loading of 0.897 to confirm that there is a
relationship between board experience and profitability. For the second sub variable, a strong
factor loading of 0.966 on component 2. These results confirm the above hypothesis which
postulates that there is a positive relationship between board experience and profitability. More
so, Padachi (2006), Naser and Mokhtar (2004) conducted studies which supports the findings of
this study which states that there is a positive relationship between board experience and firm
profitability. Therefore, the study conclude that financial problems and poor profitability within
state enterprises and parastatals in Zimbabwe are as a result of lack of adequate experience in
their board members.

Table 4.9: Anova: Board experience and profitability

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 1.758 1 1.758 9.914 .006b

1 Residual 3.192 18 .177

Total 4.950 19

a. Dependent Variable: BEP1

56
b. Predictors: (Constant), BEP4

A one way ANOVA was conducted to find out if board experience is important in defining
profitability. As per the evidence shown in Table above, the p-value is less than 5% (p-value =
0.006) and as such we shall conclude that there exist a positive relationship between board
experience and profitability. There exists enough evidence to conclude that board experience is
fundamental in determining profitability. Also, the ANOVA results accept the hypothesis that
there is a positive relationship between board experience and profitability, which also conform to
the studies of Pachadi (2006).

Table 4.10 Coefficients: Board experience and profitability

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig.

Coefficients

B Std. Error Beta

(Constant) -1.606 .660 -2.434 .026

BEP4 .596 .189 .596 3.149 .006

a. Dependent Variable: BEP1

The table above validates the results attained on the ANOVA table. The results show a Beta
value of 0.596 which is way below the t-value of 3.149. This is confirmation of the presence of a
positive relationship between board experience and profitability. There is also a 95% confidence
interval attributed to these results. It therefore follows the conclusion that Zimbabwe state
enterprises and parastatals should make sure that all board members have adequate experience so

57
as to sustain their continuity and profitability. This conclusion was also supported by
(Chavanduka et al, 2014) who articulated that a board with diverse experience will result to a
better sustainable profitability and overall organisational performance.

4.6.3 H2: There is a positive relationship between board policy and service delivery.
In this regard, a factor analysis, ANOVA was shown using SPSS and the extraction method used
was Categorical Principal Component Analysis. The outcomes are as shown below:

Table: 4.11 Principal Component Analysis: board policy and service delivery

Total Variance Explained

Compon Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
ent

Total % of Cumulative % Total % of Variance Cumulative % Total % of Cumulative

Variance Variance %

1 2.550 51.010 51.010 2.550 51.010 51.010 2.541 50.819 50.819

2 1.178 23.562 74.572 1.178 23.562 74.572 1.188 23.752 74.572

3 .687 13.737 88.309

4 .389 7.790 96.099

5 .195 3.901 100.000

Extraction Method: Principal Component Analysis.

The table above present 2 critical components extracted out of the data using factor analysis to
test the above hypothesis. The outcomes of factor analysis show that there are components that
explain the 74.572% of the total variance. This means that these 2 components have a major
contribution of 74.572% of the total variance. Confirmation of these outcomes are further co-

58
operated on Scree Plot on Figure below where it is clear that there are 2 components with
eigenvalues greater than 1.

Figure: 4.4: Scree Plot: board policy and service delivery

Table: 4.12 Rotated Componet Matrix: board policy and service delivery

59
 Rotated Component Matrixa

Component

1 2

BPSD1 -.395 .679

BPSD2 -.848 .102

BPSD3 .932 .018

BPSD4 .242 .846

BPSD5 .859 .023

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

From the table above, the Rotated Component Matrix shows the factor loadings for each variable
that is the component on which each variable loaded most strongly on. One of the sub variables
loaded strongly on component 1 with a factor loading of 0.932 to confirm that there exists a
positive relationship between policy and service delivery, for the second sub variable, a strong
factor loading of 0.846 on component 2. Therefore, from the above findings, the general
conclusion is that Zimbabwe state enterprises and parastatals have poor board policies which has
resulted in poor service delivery for a number of years now. Hence, they should deliberate on
creating more board policies which results or foster for improved service delivery.

60
Table 4.13: Anova: board policy and service delivery

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 3.429 1 3.429 19.778 .000b

1 Residual 3.121 18 .173

Total 6.550 19

a. Dependent Variable: BPSD3

b. Predictors: (Constant), BPSD5

A one way ANOVA was conducted to find out if board experience is important in defining
profitability. As per the evidence shown in Table above, the p-value is less than 5% (p-value =
0.000) and as such we shall conclude that there exist a positive relationship between board policy
and service delivery. Bauer (2005), Core (2009) and Davis (2012) all supported that there is
really a positive relationship between board policy and service delivery, thus there was enough
evidence to conclude that board policy is fundamental in determining service delivery.

Table 4.14 Coefficients: board policy and service delivery

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig.

Coefficients

B Std. Error Beta

1 (Constant) -1.824 .564 -3.234 .005

61
 BPSD5 .868 .195 .724 4.447 .000

a. Dependent Variable: BPSD3

The table above authenticates the results attained on the ANOVA table. The results show a Beta
value of 0.724 which is way below the t-value of 4.447. This is confirmation of the existence of a
positive relationship between board policy and service delivery. There is also a 95% confidence
interval attributed to these results. Therefore, the above results imply that the cause of poor
service delivery in Zimbabwe state enterprises and parastatals are as a result of poor board
policies. Hence this was also supported by Mandaza (2014) who postulated that unless
Zimbabwe state enterprises and parastatals uses board policy to sustain its continuity then the
organisation will not be able to sustain service delivery and a better organisational performance.

4.6.4 H3: There is a positive relationship between board expertise and contribution to GDP.
In this regard, a factor analysis, ANOVA was shown using SPSS and the extraction method used
was Categorical Principal Component Analysis. The outcomes are as shown below

Table: 4.15 Principal Component Analysis: board expertise

Total Variance Explained

Compon Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
ent

Total % of Cumulative Total % of Cumulative % Total % of Cumulative %

Variance % Variance Variance

1 1.960 39.197 39.197 1.960 39.197 39.197 1.774 35.487 35.487

2 1.467 29.331 68.528 1.467 29.331 68.528 1.652 33.041 68.528

3 .751 15.018 83.545

62
4 .673 13.456 97.001

5 .150 2.999 100.000

Extraction Method: Principal Component Analysis.

The table above present 2 critical components extracted out of the data using factor analysis to
test the above hypothesis. The outcomes of factor analysis show that there are 2 components that
explain the 68.528% of the total variance. This means that these 2 components have a major
contribution of 68.528% of the total variance confirming the relationship between board
expertise and contribution to GDP. Confirmation of these outcomes are further co-operated on
Scree Plot on Figure below where it is clear that there are 2 components with eigenvalues greater
than 1.

Figure: 4.3: Scree Plot: board expertise and contribution to GDP

63
Table: 4.16 Rotated Componet Matrix: board expertise and contribution to GDP

Rotated Component Matrixa

Component

1 2

BEC1 .859 .241

BEC2 .732 .203

BEC3 -.659 .547

BEC4 .246 .677

64
BEC5 .086 .891

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

From the table above, the Rotated Component Matrix shows the factor loadings for each variable
that is the component on which each variable loaded most strongly on. Evidence provided above
is to confirm the 2 distinct components that contributed to the total variance explained of
68.528%. The rotated component matrix table further show the different components onto which
each of the 5 variables of board expertise and contribution to GDP loaded on. Results of the
rotated component matrix show that parastatals should consider factors like skill, expertise and
personalities when choosing board and this is evidenced by a factor loading of 0.859 on
component 1. On component 2 the factor loading of 0.891 strongly confirm that board expertise
influence the ability of state enterprises and parastatals contribute to the GDP. Arcot and Bruno
(2006) and MacNeil (2006) suggested that quality board expertise will lead to a well-performing
state enterprises and parastatals which in turn result to a higher contribution to the Gross
Domestic Product, hence they also support the results above.

Table 4.17: Anova: board expertise and contribution to GDP

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 2.438 1 2.438 7.617 .000b

1 Residual 5.762 18 .320

Total 8.200 19

65
a. Dependent Variable: BEC1

b. Predictors: (Constant), BEC2

An SPSS test was conducted using ANOVA to find out if board expertise elements like skill,
personality and expertise are dependent on the contribution to GDP. As per the evidence shown
above, the p-value<0.001 and so we accept the alternative hypothesis (H3) which states that there
is a positive relationship between board expertise and contribution to GDP. At α=0.05 level of
significance, there exists enough evidence to conclude that the board expertise is strongly related
to the contribution to GDP. Therefore, Zimbabwe state enterprises and parastatals should make
efforts to include experts and technocrats as board members. This result is also supported by
Dahya & McConnell (2007) who found that there was a positive relationship between board
expertise and state enterprises contribution to GDP in the UK.

Table 4.18 Coefficients: board expertise and contribution to GDP

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig. 95.0% Confidence Interval for B

Coefficients

B Std. Error Beta Lower Bound Upper Bound

(Constant) .167 .231 .722 .480 -.319 .652

BEC2 .762 .276 .545 2.760 .000 .182 1.342

a. Dependent Variable: BEC1

Table above further ratify the results obtained in the ANOVA table. The results show a Beta
value of 0.545 which is way below the t-value of 2.760. This is evidence of the existence of a

66
positive relationship between the board expertise and contribution to GDP. There is a 95%
confidence interval that the slope of the true regression line is somewhere between 0.182 and
1.342.

Table 4.18: Descriptive statistics

Descriptive Statistics

N Mean Std. Deviation

BEC5 120 3.40 .503

Valid N (listwise) 120

On Table above, a small standard deviation of 0.503 away from the mean of 3.40 indicate that
board expertise leads to contribution to GDP. Hence, since the above results which show a
positive relationship between board expertise and contribution to GDP has also been supported
by the study of Dahya & McConnell (2007) and MacNeil (2006). This study can conclude that
the recent decline or failure of Zimbabwe state enterprises to contribute to the Zimbabwean
economy or Gross Domestic Product it was mainly because there is lack of experts and
technocrats who are in charge of these organizations hence a string of poor performances.

4.6.5 H4: There is a relationship between ages of board members and organizational
efficiency.
In this regard, a factor analysis, ANOVA was shown using SPSS and the extraction method used
was Categorical Principal Component Analysis. The outcomes are as shown below

67
Table: 4.19 Principal Component Analysis: ages of board members and organizational
efficiency.

Total Variance Explained

Compon Initial Eigenvalues Extraction Sums of SquaredRotation Sums of Squared
ent Loadings Loadings
Total % of Variance Cumulative Total % of Variance Cumulative Total % of Variance Cumulative
% % %
1 1.830 36.595 36.595 1.830 36.595 36.595 1.579 31.578 31.578
2 1.280 25.597 62.191 1.280 25.597 62.191 1.511 30.222 61.800
3 1.023 20.467 82.658 1.023 20.467 82.658 1.043 20.859 82.658
4 .725 14.506 97.164
5 .142 2.836 100.000
Extraction Method: Principal Component Analysis.

The table above present 3 critical components extracted out of the data using factor analysis to
test the above hypothesis. The outcomes of factor analysis show that there are 3 components that
explain the 82.658% of the total variance. This means that these 3 components have a major
contribution of 82.658% of the total variance confirming the relationship between age of board
members and organizational efficiency. Confirmation of these outcomes are further co-operated
on Scree Plot on Figure below where it is clear that there are 3 components with eigenvalues
greater than 1.

68
Figure: 4.4: Scree Plot: ages of board members and organizational efficiency.

The scree plot above shows that only components 1 to 3 have eigenvalues greater than 1 and
these are the components contributing to the 82.658% explained variance on Table above.

Table: 4.20 Rotated Componet Matrix: ages of board members and organizational
efficiency.

Rotated Component Matrixa

Component

1 2 3

ABOE1 .911 .167 -.156

69
ABOE2 -.250 -.857 .160

ABOE3 .066 .025 .945

ABOE4 .822 -.025 .268

ABOE5 -.081 .865 .167

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 4 iterations.

From the table above, the Rotated Component Matrix shows the factor loadings for each variable
that is the component on which each variable loaded most strongly on. Evidence provided above
is to confirm the 3 distinct components that contributed to the total variance explained of
82.658%. The rotated component matrix table further show the different components onto which
each of the 5 variables of ages of board members and organisational efficiency loaded on.
Results of the rotated component matrix show that parastatals should consider factors age of
board members and this is evidenced by a factor loading of 0.911 on component 1. On
component 2 the factor loading of 0.865 strongly confirm that ages of board members was the
most influential factors on organizational efficiency. Wegge et al. (2008) and Dagsson (2011)
conducted studies which support the above findings that strongly confirm that ages of board
members influence organizational efficiency.

Table 4.21: Anova: ages of board members and organizational efficiency.

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 2.622 1 2.622 7.460 .000b

70
 Residual 6.328 18 .352

Total 8.950 19

a. Dependent Variable: ABOE1

b. Predictors: (Constant), ABOE4

A simple ANOVA was conducted to test whether the age of board members is dependent on
organizational efficiency. As per the evidence shown in the table above, the p-value<0.001 and
as such we accept the alternative hypothesis (H4). At α=0.05 level of significance, there exists
enough evidence to conclude that the slope of the population regression line is not zero and,
hence ,concluding that board members should be a mixer of young and old members. This result
was also supported by the study conducted by Wegge et al. (2008), which in turn indicates that
groups of diverse ages should be utilized particularly for innovation or solving complex
problems. Thus, Zimbabwe state enterprises and parastatals need to include both young and older
board members so as to cater for diersity which result to ultimate organizational efficiency.

Table 4.22 Coefficients: ages of board members and organizational efficiency.

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig. 95.0% Confidence Interval for

Coefficients B

71
 B Std. Error Beta Lower Bound Upper Bound

(Constant) .310 .302 1.029 .317 -.323 .944

ABOE4 .672 .246 .541 2.731 .000 .155 1.190

a. Dependent Variable: ABOE1

The table above authenticates the results attained on the ANOVA table. The results show a Beta
value of 0.541 which is way below the t-value of 2.731. This is confirmation of the existence of a
positive relationship between age of board members and organizational efficiency. There is also
a 95% confidence interval attributed to these results. Therefore, this study conclude that the
Zimbabwean state enterprises and parastatal boards need to be blended with a mixture of board
members of different age group, as this allow continuity and flow of ideas which will result to
organizational efficiency and a higher organisational performance. Zvavahera & Ndoda (2014)
also supported that Zimbabwe parastatals needs to blend young blood and older experienced to
compose boards which result in greater efficiency.

Table 4.23: Descriptive statistics

Descriptive Statistics

N Mean Std. Deviation

ABOE5 114 3.20 .410

Valid N (listwise) 114

72
On Table above, a small standard deviation of 0.410 away from the mean of 3.20 indicate that
ages of board members highly influence organizational efficiency. From the results above, this
study therefore concludes that that board members should be a mixer of young and old for
Zimbabwe state enterprises and parastatals to achieve organizational efficiency.

4.6.6 H5: There is a positive relationship between board gender balance and organizational
effectiveness.
In this regard, a factor analysis, ANOVA was shown using SPSS and the extraction method used
was Categorical Principal Component Analysis. The outcomes are as shown below:

Table: 4.24 Principal Component Analysis: board gender balance and organizational
effectiveness.

Total Variance Explained

Compon Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
ent

Total % of Cumulativ Total % of Variance Cumulative Total % of Cumulative %

Variance e% % Variance

1 2.224 44.477 44.477 2.224 44.477 44.477 1.851 37.027 37.027

2 1.176 23.529 68.006 1.176 23.529 68.006 1.549 30.979 68.006

3 .770 15.390 83.396

4 .493 9.860 93.256

5 .337 6.744 100.000

Extraction Method: Principal Component Analysis.

73
The table above present 2 critical components extracted out of the data using factor analysis to
test the above hypothesis. The outcomes of factor analysis show that there are 2 components that
explain the 68.006% of the total variance. This means that these 2 components have a major
contribution of 68.006% of the total variance. Confirmation of these outcomes are further co-
operated on Scree Plot on Figure below where it is clear that there are 2 components with
eigenvalues greater than 1.

Figure: 4.5: Scree Plot: board gender balance and organizational effectiveness.

74
Table 4.25: Anova: board gender balance and organizational effectiveness.

ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 1.231 1 1.231 5.878 .000b

1 Residual 3.769 18 .209

Total 5.000 19

a. Dependent Variable: GOE5

b. Predictors: (Constant), GOE2

A one way ANOVA was conducted to find out if board gender balance is important in defining
organizational effectiveness. As per the evidence shown in Table above, the p-value is less than
5% (p-value = 0.000) and as such we shall conclude that there is a positive relationship between
board gender balance and profitability. The results above show enough evidence to conclude that
board gender balance is fundamental in determining organizational effectiveness. . Shaw &
Carter (2007) and Bohren & Strom, (2010) also conducted studies that support the results found
by this study. Hence this study can conclude that there has been lack of gender balance in
Zimbabwe state enterprises boards which has resulted mostly to organizational ineffectiveness in
most state enterprises and parastatals.

75
Table 4.26: Respondents Bar Graph

The results on Figure above indicate that around 84 respondents out of 114 agreed that all
committees are appropriately composed of male and female representatives. Therefore, it will be
very difficult for all the organisations to consider gender balance to achieve the stated
hypothesis.

GOE5

Frequency Percent Valid Percent Cumulative

Percent

Valid A 57 50.0 50.0 50.0

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 SA 57 50.0 50.0 100.0

Total 114 100.0 100.0

Results on Table above further ratify the results presented before. About 57 respondents strongly
agree that gender influence organizational effectiveness also the other remaining 57 agreed to the
same notion. Therefore, H5 has been accepted since gender balances influence organizational
effectiveness. This results are supported by Shaw and Carter (2007) who found that
organizations with gender balance were motivated to perform better towards organization goal as
women and men compete favorably to deliver on their assignments. Thus, in general Zimbabwe
state enterprises and parastatals have to incorporate women and try to create a gender balanced
board because female board members reflect a diversified characteristic of the board (Bohren
and Strom, 2010). In addition, female board members usually have a better understanding of a
market in comparison with male members. As such, this understanding will enhance the
decisions made by the board (Smith et al, 2006).

4.7 Conclusion

This chapter incorporates general and cross tabulation analysis through tables, frequency
distributions, bar graphs and diagrams in presenting the findings. Further the study carried out
the hypothesis testing between the board composition variables and firm performance and the
method used to extract data was the Categorical Principal Component Analysis and all the
hypothesis were accepted. It demanded categorizing data by its impact on the dependent variable
and the measure showed strong, significant, positive relationships between board composition
and performance of Zimbabwe state enterprises and parastatals. The study indicated that five
board composition fundamentals are significantly and positively related or linked to the

77
performance of Zimbabwean state enterprises and parastatals. Therefore basing on these findings
the study accepted the hypothesis that there was a relationship between board composition and
firm performance of Zimbabwe state enterprises & parastatals. Chapter 5 will summarise and
conclude the research.

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter discusses the following; summary of the study, conclusions of the study,
recommendations and areas for further study.

5.2 Summary of the study

The purpose of this study was to evaluate the link between board composition and corporate
performances of Zimbabwe state enterprises and parastatals. A sample of 20 parastatals with 114

78
respondents from SEP’s employees, SEP’s management, CEO representatives, workers from
parent ministry and other SEP’s stakeholders was used to gather evidence which was used to test
the claim of the objectives in this study.

The researcher performed sample adequacy and reliability tests through data analysis and as per
the existing literature which notes that when a small sample size is used there is need to test
validity and reliability of the results. A pre-coded structured questionnaire was used as the data
collection instrument.

The questionnaire captured most of the elements that constitute board composition and corporate
performance forming the different sections of the questionnaire. The questionnaire was pilot
tested and then administered in person and a total of 129 questionnaires were administered and
115 were returned, of the 115 returned questionnaires 114 were used in this study.

Clean data was entered into SPSS for data analysis and presentation. The Categorical Principal
Component Analysis was used to prove that all the objectives were determined. A simple
ANOVA conducted also confirmed that all the objectives were supported because p-value
(0.000) < 0.001.

Notwithstanding the findings, this study had its fair of limitations; among them the relatively
smaller sample size. Hence, further studies can be steered to explore the same topic using a
bigger sample size and a wider geographical delimitation since the researcher concentrated on
mainly in Zimbabwe state enterprises and parastatals headquarters in Harare.

5.3 Conclusions of the study

The main objective of the study was to analyse the effectiveness of board composition how it
influence the performance of Zimbabwe state enterprises and parastatals. Thus, the five
hypotheses were formulated in chapter 1 of the study. The following conclusions are reached
with respect to each hypothesis.

79
5.3.1 H1: There is a positive relationship between board experience and profitability.
Based on literature review and the results presented in chapter 4 of this study, it was proved that
there existed a positive relationship between board experience and profitability. There existed
enough evidence from the literature notes that to conclude that board experience is fundamental
in determining profitability. The conclusions of this study agreed with Padachi (2006), Naser and
Mokhtar (2004) which revealed that there is a positive relationship between board experience
and firm profitability.From the analysis of the results presented, prove that good corporate
governance requires that the nomination of directors should be based on merit and conducted in a
transparent, professional and objective manner. In addition, the potential board members should
be properly qualified and experienced, possess relevant expertise and be capable of devoting
sufficient time to the tasks assigned to them.Based on these results and reviewed literature, we
conclude that board experience is positively related to profitability. In other words board
experience can lead to enhanced profitability or corporate performance.

5.3.2 H2: There is a positive relationship between board policy and service delivery.
Based on literature and the results obtained in this study, support the above hypothesis; there is
enough evidence to conclude that board policy is imperative in determining service delivery.
This is consistent with Davies (2012) who found a positive relationship between board policy
and service delivery. Evidence from literature review show that that Zimbabwe state enterprises
and parastatals must make use of its board policy to sustain its continuity which will result in
sustainable service delivery and a better organisational performance (Mandaza, 2014). More so
the conclusions of this study agreed with Bauer (2005) which revealed that there is really a
positive relationship between board policy and service delivery, thus there was enough evidence
to conclude that board policy is fundamental in determining service delivery Results from data
analysis show that good board policies must result in improved service delivery. The alternative
hypothesis (H2) was accepted based on the results of the data analysis and therefore, there exists
a positive relationship between policy and service delivery.

5.3.3 H3: There is a positive relationship between board expertise and contribution to GDP.
There is evidence from both the reviewed literature and results from data analysis backing the
importance of board expertise to sustain competitive advantage which result to greater

80
contribution to the GDP by Zimbabwe state enterprises and parastatals. Reviewed literature
suggest that there exist a positive relationship between board expertise and contribution to GDP,
This conclusion is in agreement with Colley (2013) who revealed enough evidence to conclude
that the board expertise is strongly related to the contribution to GDP. Therefore, Zimbabwe state
enterprises and parastatals should make efforts to include experts and technocrats as board
members. This result is also in agreement with Dahya & McConnell (2007) who found that there
was a positive relationship between board expertise and state enterprises contribution to GDP in
the UK. The alternative hypothesis (H3) was accepted based on the results of the data analysis
and this piece of evidence is critical as Zimbabwe state enterprises and parastatals continues on
their mission towards sustainable contribution to GDP through improved performance.

5.3.4 H4: There is a positive relationship between ages of board members and
organizational efficiency.
Both the reviewed literature and evidence presented in this study confirmed the existence of a
positive relationship between age of board members and organizational efficiency. There is also
a 95% confidence interval attributed to these results. Therefore, this study concluded that the
Zimbabwean state enterprises and parastatal boards need to be blended with a mixture of board
members of different age group, as this allow continuity and flow of ideas which will result to
organizational efficiency and a higher organisational performance. Analysis of results concluded
that the proportion of the young people in the boardrooms of the Zimbabwean state enterprises
and parastatals is relatively low and has a significant positive association with service delivery.
Hence this implied that younger board members are more likely to be motivated to face new
challenges and strategic changes that lead to higher performance, as suggested by Hambrick and
Mason (2014) and Wiersema and Bantel (2002). Therefore, we conclude that age of board
members have an effect on organizational efficiency, and therefore, the alternative hypothesis
(H4) was accepted based on the results from data analysis.

5.3.5 H5: There is a positive relationship between board gender balance and organizational
effectiveness.
In particular, this study concluded that female board members exemplify a divergence of board’s
membership and this diversified nature will contribute positively to firm’s performance. This
further confirms the findings of (Hermalin & Weisbach, 2003; and Ekoja, 2007) that, gender

81
balance is endogenous, which is an indication that, a significant relationship between gender
balance and profitability is not based on external influences or structures. The results of this
study also suggest a call for the encouragement of equal opportunity for all groups of employees,
including women, based on their competence and contribution to the organization. It should not
immediately be interpreted that the presence of women in the boardrooms would destroy
shareholder value.

5.4 Recommendations
From the findings and conclusions of the study, the following recommendations were made:

5.4.1 Appointment of capable/ competent individuals

It is imperative for the government to give positions of authority to men and women of
truthfulness and capability so that the country can get the best out of state enterprises and
parastatals. More so, board members should be appointed on merit not as a form of political
mileage or reward.

5.4.2 Conduct rapid and unannounced audits

The board should tighten internal systems by engaging both internal and external audits to ensure
that public entities’ resources are used as intended.

5.4.3 Need for gender balance in parastatal

The board should appoint female board members because these female managers as research has
revealed that female leaders tend to be more effective than their male counterparts. There was
need for policy makers to develop policies aimed at refining the involvement of gender diverse
boards to the effectiveness of the firms.

5.4.4 Need for rules and regulations that promotes transparency and accountability

Zimbabwe state enterprises and parastatals transparency need to be improved in order to restore
public trust in the manner in which SOEs are managed. Also, there is need to clarify roles and
responsibilities so as to achieve greater accountability.

82
5.4.5 Improved disclosure of information to the public.

The Auditor-General should be given authority ensure that ministers and SOEs release audit
information to avoid cases of late or non-disclosure. More so, Zimbabwe state enterprises and
parastatals should regularly publish their financial statements showing the true position of the
organizations

5.4.6 Privatization of other State enterprises and parastatals.

The government should privatize some of its entities that that are poor performing in order to
ease the pressure on the fiscus.

5.5 Areas for further study

It is therefore hoped that this research can assist other researchers to further investigate other
complexities faced by public entities boards in effectively discharging their duties.

Thus the following areas were recommended for further research:

 Another possible area of research would be establishing the impact of political

intervention in the operations of the board and the public entities.
 Another possible area is assessing the relationship between corporate governance and
performance of parastatals and state enterprises in Zimbabwe.
 Assessment of Problems Facing State Owned Enterprises in Zimbabwe.

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 APPENDIX 1

RESEARCH QUESTIONNAIRE

My name is R122079X. I am a student at Midlands State University undertaking a master’s

degree (Master of Commerce in Strategic management and corporate governance). I am
conducting a research entitled “Effectiveness of board composition and tenure on the
performance of Zimbabwe state enterprises and parastatals”. Your support towards this study
will be highly appreciated and treated with utmost confidentiality and only used for academic
purposes.

GENERAL INSTRUCTIONS
Please read the question below and tick [ ] in the appropriate box.

SECTION A: DEMOGRAPHIC INFORMATION

1. Gender (please tick where appropriate)
Male Female
2. Age group (please tick where appropriate)
25-34 years
35-44 years
45-54 years
55 and above
3. Highest qualification achieved (please tick where appropriate)
Secondary

Diploma
Degree
Masters
Others (please specify)………………….

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 4. Position (please tick where appropriate)
Workers of parent Ministry
Workers of SEP’s
Senior Managers of SEP’s
CEO (representatives)

Other Stakeholders

SECTION B:
Please indicate (by ticking) the extent to which you agree or disagree with statements below
using the following Likert scale.
Strongly 1
Disagree
Disagree 2
Neutral 3
Agree 4
Strong Agree 5

1. Views of respondents on the link between board experience and profitability

1 2 3 4 5
BEP1 The organisation has made profits in the last 5 years.
BEP2 The board members meet minimum or maximum years of
experience.
BEP3 Board members have variety of work experience.
BEP4 Board experience has an influence on profitability.

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 BEP5 Board experience is vital for the organisation to realise
profits.

2. Views of respondents on the relationship between board policy and service delivery

1 2 3 4 5
BPSD The board policies has been favorable to improve service
1 delivery.
BPSD Different board policies to promotion has improved
2 delivery of services to external customers.
BPSD Innovative approaches and policies has smoothened
3 service delivery process.
BPSD Service delivery is been evaluated regularly using a set
4 benchmark by the board.
BPSD Board policies influence service delivery.
5

3. Views of respondents on the relationship between board expertise and contribution

to GDP.
.
1 2 3 4 5
BEC1 The organization has been directly contributing to the GDP
in the last 5 years.
BEC2 Board have the right blend of skill, expertise and
personalities to effectively discharge its duties.
BEC3 Directors possess expertise in a field relevant to the
organization’s mandates.
BEC4 Board has done enough to ensure the organization
contribute to the GDP.
BEC5 Board expertise influence the organization’s ability to
contribute to the GDP.

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4. Views of respondents on the link between ages of board members and
organizational efficiency.

1 2 3 4 5
ABOE1 The organization has not received funding from the
government in the last 5 years.
ABOE2 The board members meet the minimum or maximum age
requirements.
ABOE3 The board have a blend of both young and older members
ABOE4 The board is fully responsible for approving the use of the
organizational resources.
ABOE5 Ages of board members is the most influential factors on
organizational efficiency

5. Views of respondents on the link between gender and organizational effectiveness.

1 2 3 4 5
GOE1 The board is gender balanced
GOE2 All committees are appropriately comprised of male and
female representatives
GOE3 Board committees are very effective.
GOE4 The board understands and effects appropriate incentives
for enhanced performance.
GOE5 Gender influence organizational effectiveness.

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Any other information you may wish to provide if any?
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Thank you for your corporation.

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 APPENDIX 2
Interview guide for State enterprises and parastatals management
1. How long have been in the management position?
2. What is your level of experience in other areas outside the public sector?
3. Would you like to spend the rest of your career in the public sector?
4. What is your overall view on board composition of public entities?
5. Do you think board composition affect performance of state enterprises and parastatals?
6. Does experience of board members affect the profitability of state enterprises and
parastatals in Zimbabwe?
7. Do you feel ages of board members have any effect on organizational efficiency?
8. Does board policy have a direct effect on service delivery?
9. How well do you think gender balance in boards contribute to organizational
effectiveness?
10. What are other critical corporate governance issues to do you think contribute to
enhanced performance of Zimbabwe state enterprises and parastatals? How much of
importance are these issues?

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