The role of corporate governance on the efficiency of state- owned enterprises and the impact on entrepreneurship

Abstract

State Owned Entities are established as a governance recourse by governments to promote economic growth. Corporate governance has been enforced as a measure of catching up corporate practices as well as global laws and regulations. Entrepreneurship has seen growth in recent years and thus needs to be governed by standard rules and regulations for it to be uniform. The aim of this research was to assess the role of corporate governance on the efficiency of state-owned enterprises (SOEs) and the impact on entrepreneurship in South Africa. This study contributes to the importance of instilling the guidelines of corporate governance in SOEs, while linking them to entrepreneurship. The study emanated from a wide viewpoint of envisioning state-owned enterprises as possible catalysts for economic growth as well as vehicles that can spread government’s resources and capabilities. The study bore three objectives: (1) to investigate the extent to which transparency and accountability affect the efficiency of state-owned enterprises as experienced by entrepreneurs; (2) to evaluate how values and ethics drive the efficiency of state-owned enterprises as experienced by entrepreneurs; and (3) to assess how management board, supervisory board and committees propel the efficiency of state-owned enterprises as per the entrepreneur’s point of view. A theoretical framework of corporate governance was instituted, and a conceptual framework was proposed to explore the key constructs identified. As per the proposed conceptual framework, the efficiency of SOEs was determined by three factors: transparency and accountability; values and ethics; and management board, supervisory board and committees. A total sample of 314 online participants in South Africa, of which 89% were based in Gauteng, was tested. SPSS software was utilised for the data analysis and the results indicated that the relationships between the constructs forming the conceptual framework and the efficiency of SOEs, linked to entrepreneurial activity, were insignificant. The hypotheses were tested using Spearman’s correlation values. The study included recommendations on improving the efficiency of SOEs as well as suggestions for future research