An investigation into the importance of corporate governance in Zimbabwean Small and Medium Scale Enterprises
Abstract
The study set out to investigate the importance of corporate governance in Small and
Medium Enterprises in Zimbabwe. The main objective was to find out if there was a positive
relationship between corporate governance practices and business performance. The sub-objectives
were to establish if there was a link between the corporate governance principles,
board independence, internal controls, disclosure and owner-manager separation with
business performance. The research took a quantitative approach and used self-administered
questionnaires as the research instrument. A sample of 110 questionnaires was collected from
the Central Business District and surrounding industrial areas in Harare. Descriptive and
inferential tests were performed on the data. The results indicated that the two independent
variables internal controls and disclosure had positive relationships with business
performance. Board independence and owner-manager separation had no significant effect
on business performance. Amongst the demographic variables, educational qualification was
an explanatory variable of business performance. The findings led to the conclusion that
internal controls and disclosure are predictors of business performance and it is therefore
recommended that they be implemented in SMEs. It is further recommended that the level of
qualification be taken into account when SMEs are employing management as this has
significant impact on the performance of the business.