Leadership Effectiveness and Sustainability of State-Owned Enterprises

Leadership Effectiveness and Sustainability of State-Owned Enterprises

Copyright: © 2023 |Pages: 26
DOI: 10.4018/978-1-6684-9711-1.ch004
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Governments across many African countries acknowledge that well-managed State-Owned Enterprises (SOEs) lead to economic growth and the upliftment of citizens' welfare and livelihoods. Hence, SOEs require effective leadership to achieve strategic objectives. The chapter aims to examine the relationship between leadership effectiveness and sustainability in SOEs following a literature review approach. This chapter is based on reviews of academic and popular literature utilizing deductive and inductive thinking approaches. The study found that there is a dearth of leadership effectiveness in most SOEs, which has an adverse effect on the operations of SOEs. The transformational, transactional, servant, authentic, adaptive, and situational leadership styles could be adopted in SOEs to ensure sustainability. This is essential to provide meaningful public goods and services that meet the needs of stakeholders.
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The vital economic role that SOEs play in a country cannot be under-emphasized. This is the reason why most African governments have established SOEs bodies through legal means so that they can take part in activities of a commercial nature that they make significant contributions to national economic growth. SOEs have, however, failed to play this economic role in many African countries. Irrespective of SOEs failing to meaningfully play the above-described role, they are still considered an important instrument in any government toolbox for societal and public value creation, given the right context (Price Waterhouse Coopers (PWC), 2015). In other words, wherever SOEs have been established, governments had a noble purpose of coming up with a business arm of the state which is semi-autonomous, and these institutions would be operated on a real business model that would enable them capable of making significant contributions to the growth of national economies. In many cases, SOEs in Africa have failed to live up to the expectations described above, hence the need to explore this problem and try to figure out where the problems lie. Mutize and Tefera (2020) recount that African governments, during the wave of privatization, retained control of critical sectors in the energy, rail transport, broadcasting services, and telecommunications, to mention a few examples, and this created some governance issues which may be attributed to the failure of SOEs to live up to national and stakeholder expectations of their contributions to the growth of national economies.

The focus of this chapter is SOEs’ leadership effectiveness and the sustainability of SOEs in Africa. In most SOEs in Africa, leadership is characterized by poor leaders who are not visionary, leaders who cannot excite subordinates to achieve the impossible, and leaders incapable of having the external energy, and inner strength to face challenges in the turbulent environments in which they currently operate. Many leaders in SOEs in African countries lack the mental agility that enables them to make effective decisions. The leaders also do not allow their team members grow and carry out tasks without interruption as they cannot relinquish and delegate power to their team members. The leaders in several SOEs cannot tap into employees’ souls and are not emotionally intelligent to enhance subordinates’ confidence by understanding and dealing with their emotions and concerns. Leaders in SOEs do not reflect the ability to adapt their leadership styles to the needs of the situation and people (Erasmus, Loedolff, Mda & Nel, 2015; Gie, 2021; Lazenby, 2015; Henrikse & Hefer-Hendrikse, 2012).

Most leaders in SOEs are appointed on a political ticket, and there is a lot of political interference in decision-making in these bodies, which makes it very difficult for governance issues to be adhered to (Mutahaba, 2012). There are several examples of SOEs which have experienced a lack of leadership effectiveness and sustainability in the Southern African region such as Air Namibia, South African Airways (SAA), Zimbabwe Electricity Supply Authority (ZESA), Road Construction Company (RCC) of Namibia, Namibia Broad Casting Corporation (NBC), South African Broad Casting Corporation (SABC), TransNamib and ESKOM, to mention a few examples, showing that a lack of leadership effectiveness is an Achilles heel to most SOEs in African countries. To address this gap, this chapter examines the possible influence of leadership effectiveness on SOEs’ sustainability.

The remaining sections and/or subsections of this chapter provided the required information on the background, current status quo of leadership in SOEs and a set of tests that SOEs must pass, leadership issues in SOEs, sustainability issues in SOEs, meaning of leadership, leadership approaches for SOEs effectiveness, future research directions, and conclusion.

Key Terms in this Chapter

State-Owned Enterprise: A government entity that is established or nationalized by the national government or provincial government by an executive order or an act of legislation in order to provide public goods or services.

Leadership Effectiveness: concerns executing the company's vision (or redefining and improving it, in some cases) and setting the tone and the culture for the specific organization.

Public Value Creation: To affect how individuals and groups think and feel about community and society. It is never just produced and delivered. It must be perceived to come into existence, it depends on perception, interpretation, and meaning making.

Public Goods and Services: In Economics, public goods and services refer to commodities or services that are made available to all members of society. The services are administered by governments and their agencies and paid for collectively through taxation.

Mandate: An official order or commission to do something.

Sustainability: Consists of fulfilling the needs of current generations without compromising the needs of future generations, while ensuring a balance between economic growth, environmental care, and social well-being.

Leadership: The process where an individual influences groups of people to achieve a common goal.

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