The Efficacy of Incentives in Strengthening Corporate Governance Regulatory Frameworks in State-Owned Enterprises in Zimbabwe

Abstract

The study examines the extent to which incentives strengthen the effect of the corporate governance regulatory framework on state-owned enterprises‘ (SOEs) performance. Little evidence exists about how to strengthen the corporate governance regulatory framework as prior studies focused more on the direct cause-effect link between corporate governance and organisational performance without bringing in the moderating effects of incentives on this relationship. The Agency Theory and the Stakeholder Approach underpins the study, complemented by Stewardship and Business Ethics Theories. Data was collected from 52 SOEs and covered 104 members of executive management,208 non-executive board members and 156 stakeholders (customers). Explanatory research design was used. Moderated multi-regression analysis was undertaken to analyse the quantitative data with the aid of SPSS. The study focuses on corporate governance within the existing regulatory framework, comprising the Constitution, the Public Entities Corporate Governance Ac, and SOEs‘ establishing acts and involved participants from boards, management and ministries who had served in their positions for at least three years. Despite these limitations, the representativeness of the sample size, as well as the rigour undertaken in terms of the analysis, validate the findings of this study. The study findings indicate that adherence to the corporate governance regulatory framework has a positive effect on the performance of SOEs. Incentives strengthen the relationship between compliance to the corporate governance framework and performance. The results from this study suggest the need for incentives for performance to strengthen the corporate governance regulatory framework and improve its effectiveness towards enhancing overall performance.