Investigation into the Adherence to Corporate Governance in Zimbabwe’s SME Sector

By Maxwell Mago

This book scruitinizes the corporate governance practices in small to medium enterprises in Zimbabwe, with the intention of identifying any loop-holes and recommend measures for improvement.

• Language: English
• Publisher: LAP LAMBERT Academic Publishing
• Release date: May 17, 2018
• ISBN: 9781386193111

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Investigation into the Adherence to Corporate Governance in Zimbabwe’s SME Sector

by

Maxwell Mago

A Dissertation submitted in Partial Fulfillment of the Requirements for the Masters Degree in Business

Administration

2016

Graduate School of Management

University of Zimbabwe

DECLARATION

I, ....................................................,do hereby declare that this dissertation is a result of my own investigation and research, except to the extent indicated in the Acknowledgements, References and comments included in the body of the report, and that it has not been submitted in part or in full for any other degree to any other university.

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Student Signature      Date

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Supervisor Signature      Date

ACKNOWLEDGEMENTS

First, I would like to thank God for protecting me throughout my Masters in Business Administration studies at the University of Zimbabwe. I am grateful of the support rendered by my family, especially my wife Caroline, and colleagues during the course of my study of the tasking MBA program.

My gratitude also extends to Dr Maravanyika, affectionately known to MBA students as Denmara, who assisted me in putting this dissertation together. I am thankful for his time, unwavering support and the knowledge that he imparted to me, plus the study material he offered.

I would also like to thank the staff from the SME organizations and ZIMRA for partaking their time participating in the interviews, providing me with the necessary information for carrying out this research. My gratitude extends to the Graduate School of Management lecturers and staff for the profound knowledge that I have gained over the past two years.

ABSTRACT

Corporate governance (CG) is the stewardship responsibility of corporate directors to provide a befitting oversight for the fulfilment of the goals and strategies of a company, on behalf of all its stakeholders. Its objectives include the achievement of the trust of stakeholders in the governance of the firm, transparency, amicable resolution of crisis and maintenance of CG practices. The purpose of this study was to investigate the adherence to CG in Zimbabwe SMEs. Many researches in CG practices through literature and other academic platforms focused in other parts of the globe, with a few exceptions on Sub-Saharan Africa. They also concentrated in large and/or stock exchange listed and multinational companies, remaining silent on SMEs operating in developing countries like Zimbabwe. This cross-case study used a qualitative survey design. The survey was conducted on four SME organizations chosen from a short list of twenty such firms provided by the relevant government Ministry, using judgmental sampling procedure. Questionnaire guides, with semi-structured and open-ended questions were employed in collecting data which was qualitatively analyzed using data display tables. The results indicate that there is lack of strict adherence to CG principles in Zimbabwe SMEs. These findings have implications to owners and managers of SMEs in Zimbabwe who are advised to: restructure their firm engagements with stakeholders to go beyond marketing so as to improve their loyalty, involvement and guidance; adequately source funding for setting up and maintaining properly regulated boards for safeguarding accountability and enforce meeting responsibilities; educate the powers that be to improve their appreciation of the roles of boards of directors in engaging proper governance practices; and adopt, align and monitor compliance with some specifically adopted particular CG code for meeting CG practices.

Key words: Corporate governance, stakeholders, transparency, adherence, SMEs, cross-case study.

TABLE OF CONTENTS

Declaration .................................................................................................ii

Acknowledgements  ....................................................................................iii

Abstract  ....................................................................................................iv

List of tables .............................................................................................viii

List of figures .............................................................................................ix

CHAPTER 1: INTRODUCTION AND BACKGROUND........................................1

1.0  Introduction .......................................................................................1

1.1  Background .......................................................................................4

1.2  Problem Statement ..............................................................................5

1.3  Research Objectives .............................................................................6

1.4  Research Questions ..............................................................................6

1.5  Research Proposition .............................................................................7

1.6  Significance .......................................................................................7

1.7  Limitations .......................................................................................8

1.8  Scope ..............................................................................................8

1.9  Structure of the research ....................................................................... 8

1.10  Chapter Conclusion .............................................................................9

CHAPTER 2: LITERATURE REVIEW ............................................................9

2.0  Introduction ......................................................................................9

2.1  Stewardship .....................................................................................10

2.2  Monitoring .......................................................................................12

2.3  Governance codes  ............................................................................13

2.4  Board regulation ................................................................................15

2.5  Conceptual framework .........................................................................17

2.6  Literature Conclusion and established gap in literature ...................................18

CHAPTER 3: RESEARCH METHODOLOGY ................................................19

3.0  Introduction .....................................................................................19

3.1  Research design .................................................................................20

3.2  Research philosophy ...........................................................................20

3.3  Research strategy ...............................................................................22

3.4  Data collection ..................................................................................23

3.4.1  Population .......................................................................................23

3.4.2  Sampling strategy ..............................................................................24

3.4.3  Research instruments ..........................................................................24

3.5  Data analysis ...................................................................................26

3.6  Validity and reliability ........................................................................26

3.7  Limitations .....................................................................................27

3.8  Ethical considerations .........................................................................27

3.9  Chapter Conclusion ...........................................................................27

CHAPTER 4: RESULTS AND DISCUSSION ..................................................28

4.0  Introduction .....................................................................................28

4.1  Key respondents ...............................................................................28

4.2  Information gathering .........................................................................29

4.2.1  Section A: Background of respondents .....................................................29

4.2.2  Section B: Cultivation of stakeholder concerns ...........................................30

4.2.3  Section C: Activities towards meeting monitoring regulations .........................35

4.2.4  Section D: Alignment to Corporate Governance codes ..................................38

4.2.5  Section E: Maintenance of board regulations .............................................41

4.3  Summary of findings ..........................................................................45

4.4  Chapter Conclusion .............................................................................45

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS ............................46

5.0  Introduction ....................................................................................46

5.1  Research findings restated ....................................................................46

5.2  Conclusions ....................................................................................46

5.2.1  Stewardship influences on CG in Zimbabwe SMEs ......................................47

5.2.2  Monitoring effects on CG in Zimbabwe SMEs ...........................................47

5.2.3  Governance codes reflection on CG in Zimbabwe SMEs ...............................47