Evaluation of the impact of corporate governance practices on procurement compliance; case of Safaricom PLC
Otera, Grace Luchiri
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The main objective of this study was to evaluate the impact of corporate governance on procurement compliance at Safaricom, Plc. In general Kenya’s entities have had a history of poor governance systems with about 70% of the scandals attributed to weak corporate governance practices, lack of internal controls, conflict of interest and weaknesses in regulatory and supervisory systems. Despite the prominence of corporate governance, academics and practitioners in developing markets have accorded the issue very paltry effort and attention, resulting to very few studies in the area. The main objective of this study was to evaluate of the impact of corporate governance practices on procurement compliance a case study of Safaricom, Plc. The constructs of corporate governance used in the study include transparency, fairness, accountability and corporate responsibility. The study used descriptive research design with a questionnaire as a data collection instrument. The collected data was analyzed using descriptive statistics and presented using tables and charts. This study established that the Likert scales used were reliable to capture the variables as measured by Cronbach’s reliability coefficient (above 0.8 for all the four variables). The responses (83.40% response rate) received also cut across the organization in terms of sections and across different levels of management, depicting a fair representation of perceptions across the organization. In addition, the respondents had been with the organization for a reasonable duration which enabled them to have a fair grasp of the organization’s policies and processes. It is also good to note that the bulk of the respondents that is greater than 50% had a postgraduate degree or higher with the rest being holders of at least an undergraduate degree a good indication of the fact that they had the capacity to understand what the subject matter of the study was. The regression results had an average adjusted coefficient of determination (R2) of 0.233 which imply that 23.3% of procurement compliance can be explained by corporate governance practices. The ANOVA had high significance level of < 0.0001 which imply that the variation observed were not by chance but can be used to explain the relationship based on the parameter of the population as the significance value (p-value) is less than 5%. The study reveals that corporate governance has a positive effect on procurement compliance with all the three variables that is, accountability, corporate responsibility and transparency indicating a positive effect. Although fairness had a positive effect on procurement compliance, it was not statistically significant. Therefore, this study challenges the senior leadership of corporate entities to ensure that proper governance structures are instituted in their entities as they have an impact on procurement compliance. It also sensitizes the procurement leadership to push for adoption of proper corporate governance as the study proves that it leads to sustained productivity and better financial performance through procurement compliance. Those in the academic and research realm will also benefit since they can use the findings of this study as a source for future reference for further research.