The sugar-dependent economy of the 1970s was transformed into a competitive location for international textile firms in the 1980s, then into a global tourist destination in the mid-1990s, and is now moving to become a service-oriented economy.
As part of this transformation, the authorities and the private sector have worked together to make Mauritius become an international financial centre. Steps taken include the adoption of high-quality law and regulations, low taxation, and the creation of a pool of skilled professionals.
Significant achievements have been made in the area of corporate governance in the past 10 years which have helped the island to reinforce its country's reputation as a safe and secure international financial centre.
3.2 Committee on Corporate Governance
In September 2001, a Committee on Corporate Governance (CCG) was set up "with the purpose of providing a framework for improved corporate governance in Mauritius." Following policy recommendations made by World Bank Report on the Observance of Standards and Codes, 2002), the Committee developed the Report on Corporate Governance in October 2003. The latter was later revised in April 2004. The Code was developed on the basis of the King Report in South Africa, and shares many approaches with that model.
The National Committee on Corporate Governance (NCCG) was later established under the Financial Reporting Act, 2009 with the mandate of establishing and promoting principles corporate governance. The Financial Reporting Council monitors compliance with the reporting requirements of the Code.
The Code has contributed to raising awareness on corporate governance issues in Mauritius, especially in areas related to board composition, board committees, and disclosure. Other areas of corporate governance, such the stewardship role of shareholders and other stakeholders, are less prominent in the Code and have had less impact. Moreover, according to ROSC 2010 (Report on Standards and Codes - World Bank), some market participants complain that the Mauritian Code's provisions are not always clear. These include, among others, the distinctions between the "code" and the "report", as well as the distinctions between "requirements" and "aspirations" may be confusing for some market participants.
Government recognized that there exists an important link between governance and national development. For sustained development to take place, governance has to operate on many levels, national, local government, corporate and also at state owned enterprises.
Compared to private companies, State Owned Enterprises (SOEs) have a social obligation to the nation in addition to the running of an enterprise ensuring that resources are utilised in an optimum manner. In that respect, the National Committee on Corporate Governance has developed in 2006 a set of "Guidance Notes for State-Owned Enterprises" as a complementary document to the main Code to assist state-owned enterprises in addressing their specific corporate governance issues.
The Guidance Notes has adopted the premise that parastatal bodies are "social institutions" that are accountable to the wider community in general, the state is the "owner" and the population is the "stakeholder" and parastatal bodies are required to comply with the Code or explain their reasons for non-compliance, unless the respective Acts establishing these organizations specifically provides otherwise.
The rationale for state ownership of commercial enterprises is the belief that it is essential to provide important public services that would otherwise not be met from a purely financial or economic standpoint, as well as the belief in some quarters that they help to reduce inequalities and promote a fairer society. Therefore, given their overall impact on economic performance, the application of good governance practices stands high on the agenda.
Besides, the OECD has, in its report, identified three key challenges facing parastatal bodies in the attainment of good corporate governance, namely, to better identify the ownership function within the state administration, to improve transparency of their objectives and performance and lastly, to strengthen and empower the boards.
Moreover, the Government has taken tentative first steps to improve SOE governance. The Office of the Public Sector Governance (OPSG) was established in August 2010. The OPSG, formerly the Management Audit Bureau, operates under the Prime Minister's Office and reports to the Secretary of Cabinet and Head of Civil Service. The key functions of the OPSG are to support the development of a cost effective and outcome-oriented public sector and to strengthen corporate governance in the public sector.
CHAPTER FOUR: RESEARCH METHODOLOGY
4.0 Introduction
This chapter presents an overview of the methodology used in gathering the necessary information to conduct this study. It highlights the sources of data, the survey design, and the data analysis method employed.
4.1 Characteristics of Research
Saunders defines research as something that people undertake in order to find out things in a systematic way, thereby increasing and adding to academics knowledge. "To find out things' suggests there is a multiplicity of possible purposes for a research. These include describing, explaining, understanding, criticising and analysing within the overall objectives of the research (Ghauri and Gronhaug, 2002).
As such, a research is based on logical relationships and not just on beliefs. In other words, research is a systematic way of collecting and interpreting of information in order to meet research objectives. Therefore, a research has the following characteristics:
Data are collected and interpreted systematically; and
There is a clear purpose to find out things (Saunders, p. 21).
4.2 Research Methodology (Strategy for the Research)
The first stage in research process requires the researcher to develop the most efficient plan for conducting the research. This calls for decisions on the research design, data sources, research approaches, research instruments, sampling plan and contact methods.
The research design is the plan to be followed to answer the research objectives and sets out the logic of the inquiry. For any research or investigations, selection of an appropriate research design is fundamental to help arrive at valid findings, comparisons and conclusions.
There are two main approaches to research i.e., 'deductive' and 'inductive'. A deductive/qualitative approach is one which a theory and hypothesis (or hypotheses) are being developed and the research strategy tests various hypotheses. An inductive or quantitative approach, on the other hand, is one in which data are collected for testing a theory within a given context. For this study a deductive approach has been used.
Research strategy is a general plan of how one will go about answering the research questions. A researcher has to obtain both quantitative information (data in the form of numbers) and qualitative information (data in the form of words).
The quantitative research approach focuses on questions or statements that seek to collect information that can be quantified to help provide answers to the research problems. Moreover, quantitative research has the advantage of giving the possibility to repeat the survey in the future thereby enabling comparison of the results.
Qualitative research, on the other hand, seeks to answer questions such as "what?", "why?" or "how?". In general, the qualitative research has to do with open-ended, dynamic, and flexible questions that have been phrased to stimulate the respondent's creativity.
It is important to look at the 2 stages in a research work: exploratory and descriptive research.
(a) Exploratory research is used to gather preliminary data to shed light on the nature of the study i.e. getting to know the organisation's background, mission statement, objectives and policies, etc.
(b) Descriptive research describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how.... This requires that the data description is factual, accurate and systematic for a particular situation.
Once the type of research to be undertaken has been identified, it is important to decide upon the appropriate method or methods to collect data. For the purpose of this project, both primary and secondary data have been gathered.
Secondary data are facts and figures that are already available while primary data are data collected for a specific purpose or a research project. Primary data will be collected through questionnaires and secondary data, on the other hand, will be collected from magazines, books, and government publications.
4.3 Sampling Strategy
The total category of subjects which is the focus of attention in a particular research is known as population (Veal, 1997). It is also defined as "the total collection of elements about which we wish to make some inferences" (Cooper & Schindler, 2003). In more general terms, it is the entire set of people, events or objects which constitute the object of research and about which the researcher wants to determine some characteristics. The people, event or object is usually termed as the population element. For this study, the population consists of all parastatal bodies in Mauritius.
Sampling is the process of learning about the population on the basis of a sample drawn from the population. The primary objective of the sample is to obtain valid and reliable information about the population within a minimum of cost, time and effort. There are two kinds of sample technique: probability (representative) and non-probability (judgmental) sampling. In probability sampling, the probability of each case being selected from the population is known and equal for all cases. With non-probability sampling, each case selected from total population is not known (Saunders, Lewis and Thornhill, 2005). For this research a non- probability sampling has been used in view of the limited size of the population
The population has been divided into strata and stratified random sampling method has been used. The objective of this stratification is to achieve greater precision in the survey (Hunt and Tyrrell, 2001).
The parastatal bodies in Mauritius have been regrouped under 7 categories as shown in the Table below:
Table 1: Population and Sample Size per Sector
Sector
Population
Sample Size
Agricultural and Fisheries
17
15
Educational, Research, Human Resources and ICT
21
18
Health, Social and Cultural
65
58
Infrastructure and Utilities
5
5
Industry, Commerce and Tourism
7
6
Finance and Economic
9
8
Legal and Regulatory
11
10
Total
135
120
Note: some of these organisations are involved in one or more activities. For this research, they have been classified in the category where the bulk of its services are being provided.
In view of the limited population size, 90% of the population has been used in the study. With an expected response rate of 50%, it was planned to receive at least 60 questionnaires. However, the number of responses received exceeds that amount. The number of questionnaire received and the response rate is given in the Table overleaf.
Table 2: Survey Response Rate
Sector
Sample Size
Response Received
Response Rate (%)
Agricultural and Fisheries
19
14
68
Educational, Research, Human Resources and ICT
18
12
67
Health, Social and Cultural
42
24
52
Infrastructure and Utilities
13
8
62
Industry, Commerce and Tourism
10
6
40
Finance and Economic
8
7
87
Legal and Regulatory
10
7
70
Total
120
73
In view of incomplete information, 5 questionnaires were discarded.
4.4 Developing the Research Instruments
The important principle of designing a questionnaire is to understand the different variables that will be used to meet the research objectives (Veal, 1997).
The use of a questionnaire offers advantages like its versatility, speed of processing information and cost. It also eases the communication between the interviewer and the respondents and allows a better control on the process of data collection by providing a pre-established list of information needs. They have been set up in a proper order so as to ensure a logical flow of questions and thus facilitate the respondents in answering and it thus avoids confusing them with sudden changes in the subject.
The questionnaires used are made up of a mixture of both open-ended and close-ended questions. Open ended questions provide for the respondents a greater choice in giving his views and opinions while close-ended questions are used to limit the answer of the respondents and thus give a specific answer to the questions. In this respect, the Likert scale has been used.
The Likert scale is a summative model, which assumes that the individual items are monotonically related to the attributes and a summation of the item scores is related linearly to the attitude. Although broader scales increase the precision of the research, scales ranging from one up to five have been used in this study.
The questionnaires have been framed on the Code of Good Corporate Governance in Mauritius and as such it addresses the following topics:
Principles of Corporate Governance;
Boards and Directors;
Board Committees;
Role and Function of Secretary;
Stakeholders;
Risk Management, Internal Control and Internal Audit;
Accounting and Auditing;
Reporting; and
Corporate Social Responsibility
It is to be pointed out that the Code is divided into 8 Sections and overall, it is quite comprehensive as it covers all the aspects of good governance.
Since the main aim of the survey was to have a comprehensive view of corporate governance practices in parastatal bodies, some 70 questions have been developed. In order not to provide the respondents with a long questionnaire, these have been regrouped under 2 questionnaires as shown at Appendix A and B.
The questionnaires consist mainly of multiple choices, scaling and dichotomous questions. The questions have been framed using nominal, ordinal and interval scale.
4.5 Pilot Testing
Before the questionnaires have been administered, they have been pre-tested under field conditions. The pre-testing will be done to identify weaknesses, ambiguities and omissions before the questionnaires were finalised for the survey. The pilot stage, in fact, is very important in ensuring that the questionnaire is adequate for collecting the required data.
4.6 Questionnaire Administration
The questionnaires were administered to respondent organisations falling under 7 sectors and care has been taken to ensure the two questionnaires were administered to the respondents operating in those sectors.
The questionnaire has been administered to the following categories of respondents:
Chairperson;
Directors;
Secretaries;
Chief Executive Officers; and
Senior Managers.
4.7 Data Analysis
After the data has been collected, the next step in research process is data analysis. In this phase, data coding will be carried out as a means for translating information into values suitable for statistical analysis using SPSS Version 16. This will enable the researcher to interpret the information and to test various hypothesis so as to meet the research objectives.
In general, reliability refers to consistency of measurement whereas validity refers to the extent to which an instrument measures what it is intended to measure. These factors have been duly considered in the design of the survey instrument as well as in the determination of the sample size. In this respect, a Cronbach alpha analysis have been carried out on the data for questionnaire 1 and it works out to 0.782. Similarly, the Cronbach alpha for questionnaire 2 is 0.765. These are generally considered to be satisfactory results for a survey.
4.8 Ethical Considerations
The issue of ethics in a research is very important. Prior to data collection, respondents will be sufficiently informed about the purpose of the survey and they will be given the discretion to leave the survey. Finally, anonymity of participants will be maintained and all information will be treated with confidentiality.
