An Evaluation of corporate governance practices on organisational performance: a case of the haulage transport sector.

Abstract

The study sought to establish the significance of corporate governance practices on organisational performance in the haulage transport sector. The theory informing the study was the stakeholder theory. The study utilised the positivist philosophy and simple random sampling was used to determine the population from registered transport operators in Harare. Major findings from the study established that numerous factors are causing organisations in the haulage transport sector to adhere to sound corporate governance practices. The research established that organisations are experiencing a decline in orders indicating that poor corporate governance negatively impacts the image of the organisation to customers creating a risky perception to customers. Poor corporate governance in the haulage transport sector has resulted in the companies being unable to meet local and international accreditation status for specialised cargo and the decline in the sales capabilities of the organisation. In addition, organisations are incurring losses and less growth due to high cost of production and less profitability. The unaccounted loss of transport infrastructure due to the lack of oversight, responsibility and accountability primarily results in the loss of company assets and limited returns to shareholders’ investments. Various constraints have been identified from the research including the intensification of conflict of interests between management and shareholders, lack of an organisational culture that does not challenge prevalence of unethical practices, the lack of management involvement, lack of training to both managers and employees on issues of corporate governance and the multiplicity of enforcement agents and stakeholders involved in the breach of sound governance and unethical practices. High costs of compliance to licences, fines and regulatory requirements have also been identified as a major constrain to effective improvising of sound governance in the haulage transport sector. Sound corporate governance contributes significantly to improved financial, market and operational performance of organisations in the haulage trans sport sector. This may indicate less fleet maintained time, availability of space and quality equipment and fleet downtime. As strategies to improve the uptake of corporate governance in haulage transport sector organisations should provide formal training to employees and management in corporate governance and management should be actively involved in the administration of corporate governance issues. Audit tracking for accountability should be enforced and the organisational culture should advocate for the inculcation of and enforcement of sound corporate governance practices. Management should promote whistle blowing in the organisation and incentives should be provided to outstanding employees in corporate governance issues. Finally, the board of director should be composed of diverse skills to allow for the effective fostering of sound governance through instruments of auditing and accountability systems.