The effects of unethical financial decisions to parastatal performance: A case of the Agricultural and Rural Development Authority (ARDA)

Abstract

This research sought to investigate the effects of unethical financial decisions on parastatal performance. This was a case study of the Agricultural and Rural Development Authority (ARDA). Amidst a background of falling organisational performance, particularly in terms of the total area under crop in Zimbabwe, the national maize, wheat and sorghum yields, high staff turnover as well as declines in annual sales, the researcher investigated the extent to which unethical financial behaviour in ARDA is impacting upon the organisation. With such research questions as the need for an integrated framework on unethical financial decisions and their impact on company performance, the need to identify or know the factors causing unethical financial conduct in ARDA in relation to known framework on ethical financial decisions and firm performance, that to understand the nature of ethical and unethical financial decisions and to establish a relationship between the unethical financial decisions and the performance of ARDA, the researcher employed corporate governance theories and provisions like the theory of justice and the stewardship theory as well as the King Report and the Combined Code. Using questionnaires and interviews as the research instruments as well as secondary data in the form of ARDA’s reports and publications, the researcher investigated the extent and effects of unethical behaviour in ARDA. The organisation’s staff and employees formed the research population for the study. The results showed that there were high levels of unethical behaviour in ARDA, with the nature of such unethical practices being conflicts of interest, unauthorised use of company resources for personal benefit, conducting private business during working hours, falsifying records, disclosing confidential information, sexual harassment, false sick leaves and absenteeism from work. The major causes of such unethical conduct were identified as selfishness, poor management, the lack of expertise and experience, the lack of independence, corruption as well as the lack of a strategic direction for the organisation. These unethical problems significantly affected the organisation’s performance. As such, it was recommended that various stakeholders, such as the organisation’s management, the Government and ARDA employees should participate in ensuring that this organisation performs better through undertaking various strategies, within their capacities, to end unethical behaviour in the organisation. Among these strategies include reviewing the organisation’s code of conduct, the national policy on the governance of parastatals and practicing rationality for the management, the Government and the employees respectively.