Risk management factors contributing to transgressions in the procurement practices in South African SOEs

Abstract

PurposeThe study aims to deepen the understanding of why risk management principles are circumvented, thereby contributing to transgressions in public procurement for South African state-owned enterprises (SOEs). A deeper understanding of why risk management principles are circumvented is especially important in South Africa, given the high social, economic and environmental risks to which national and major SOEs are exposed in the procurement process.Design/methodology/approachThe study uses a qualitative design, based on detailed semi-structured interviews with 19 participants comprising management advisors, forensic investigators and auditors to explore why risk management principles are circumvented by South Africa SOEs.FindingsThe results of the study indicate that the tone that is set at political and executive level plays an important role in determining compliance with risk management principles by lower-level staff. Intense levels of political influence at SOEs are the main reason behind risk management systems being undermined.Originality/valueThe current study is one of the first explorations of why transgressions in public procurement continue to be evident despite risk management reforms being adopted by South Africa public sector. The research responds to the call for more studies on why reforms in South Africa public sector are not reducing transgression in public procurement. The study provides primary evidence on the importance of political and executive leadership in influencing the effectiveness of risk management reforms in the public sector.

Harnessing the value of procurement knowledge and practices for firm performance: A resource orchestration perspective

“…Specifically, these positive influences on firm performance come from compliance with best practices such as the involvement and fair treatment of all parties involved in the procurement process, transparency and accountability, among others (Butt, 2020;Myeza et al, 2021).…”

“…Compliance entails the observance of the policies, rules and procedures governing the execution of one's assignment (Kumasey et al, 2017; Myeza et al, 2021). Mrope et al (2017) also indicates compliance as an essential component in the execution of contractual obligations as well as in the implementation of procurement best practices.…”

“…Procurement's potential in helping achieve competitive advantage is due to the fact that it constitutes more than 70% of firm expenditure (Bandiera et al, 2022). However, using procurement as a source of competitive advantage demands painstaking attention to the knowledge and practices that best leverage these advantages (Khanbabaei et al, 2019; Myeza et al, 2021). This awareness and change in the mentality of Executive Leadership Teams have provoked an increasing emphasis on the acquisition of procurement knowledge and skills besides the implementation of procurement practices (Bartani et al, 2022).…”

The effects of political interference on procurement performance in the parastatal organizations in Dar es Salaam Region

“…Despite government efforts, procurement performance is not impressive (Dávid-Barrett & Fazekas, 2019;Masoud, 2021). The procurement process is associated with project delays, poor quality work, overpriced goods, corruption, malpractice, and the misappropriation of scarce public funds (Myeza et al, 2021;CAG, 2020;AG 2021). Because of the poor performance of the public procurement function, many scholars have been drawn to study in this field in hopes of finding the reasons for this misfortune and make constructive recommendations to minimize the tendency of poor performance (Basheka, 2011;Marendi, 2015).…”

“…This has also been demonstrated in Ghana. According to Myeza et al (2021) political interference has an impact on public procurement violations in South Africa and prevents the procuring entities from achieving their intended goals.…”