COMPLIANCE WITH EQUITABLE TREATMENT OF STAKEHOLDERS AND THE PROFITABILITY OF MEDIUM SCALE ENTERPRISES IN GHANA
Journal of Basic and Applied Research International,
Page 57-69
Abstract
This research investigates the impact of compliance with equitable treatment of stakeholders on the profitability of medium scale enterprises in a Ghana using descriptive research design approach. The study has three specific objectives: to construct Ghanaian medium scale enterprises’ equitable treatment of stakeholders’ compliance index; to establish the correlation between Ghanaian medium scale enterprises’ equitable treatment of stakeholders and their profitability; and the measure the impact of compliance with equitable treatment of stakeholders on the profitability of Ghanaian MSEs. The work anchored on stakeholder theory, and sampled 1010 respondents across medium scale enterprises in Ghana. Parametric tests and inferential statistics (correlation and regression) were carried out. The study empirically proved that: Ghanaian medium scale enterprises’ aggregate compliance to equitable treatment of stakeholders is 45%; and that compliance to equitable treatment of stakeholders has statistical significant positive effect on the profitability of Ghanaian Medium Scale Enterprises. This study reveals that medium scale enterprises in Ghana should place more emphasis in compliance with equitable treatment of stakeholders since it significantly increases their profitability. Finally, the need to replicate this study in other emerging and developed economies is called for since there is serious dearth in literature on this topic currently.
Keywords:
- Compliance
- equitable treatment
- medium scale enterprises
- stakeholders
- profitability.
How to Cite
TSEKPO, S. P. (2020). COMPLIANCE WITH EQUITABLE TREATMENT OF STAKEHOLDERS AND THE PROFITABILITY OF MEDIUM SCALE ENTERPRISES IN GHANA. Journal of Basic and Applied Research International, 26(6), 57-69. Retrieved from https://ikpresse.com/index.php/JOBARI/article/view/5503
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Kamunge MS, Njeru A, Tirimba OI. Factors Affecting the performance of small and micro enterprises in Limuru town market in Kianbu County, Kenya. International Journal of Scientific and Research Publications. 2014;4(12):1-20.
Darmadi S. Board members education and firm performance: evidence from a developing economy. International Journal of Commerce and Management. 2013;23(2):113-135.
Bathula H. Board characteristics and firm performance: Evidence from New Zealand. Being a thesis submitted to Auckland University of Technology in fulfillment of the requirements for the degree of Doctor of Philosophy (PhD); 2008.
Wahua L. Corporate governance, financial soundness and economic development: empirical evidence from Malaysia, Indonesia, and Turkey. Being a Paper presented at the 2nd Annual International Conference on Accounting and Finance, held at Colombo, Sri Lanka, on 25th– 27th May 2015; 2015.
Reynaud A, Thomas A. Firm's profitability and regulation in water and network industries: An empirical analysis. Utilities Policy. 2013;24(1):48-58.
Jill S, Aris S. Corporate governance and accountability. Chichester: England. John Wiley & Sons Ltd; 2010.
Asunka AB. A case for corporate governance for SMEs in Ghana. International Journal of Business and Management. 2017;12(4):168-177
Adjei LN, Oteng E, Fianu A. Accounting practices and control systems of small and medium size entities: a case study of Techiman Municipality, Journal of Finance and Accounting. 2014;2(3):30-40. DOI: 10.11648/j.jfa.20140203.11
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Amoah SK, Amoah AK. The role of small and medium enterprises (SMEs) to employment in Ghana. International Journal of Business and Economics Research. 2018;7(5):151- 157. DOI: 10.11648/j.ijber.20180705.14
Creswell JW. Research design: Qualitative, quantitative, and mixed methods approaches. 3rd. SAGE Publications Ltd; 2009.
Trading Economics (n.d.). Ghana – total businesses registered. Retrieved 10 February 2018 Available:https://tradingeconomics.com/ghana/total-businesses-registered-number-wb-data.html
Abor J, Biekpe N. Corporate debt policy of Small and Medium Enterprises in Ghana: University of Stellenbosch, South Africa; 2005.
Gay L, Mills G, Airasian P. Educational research: Competencies for analysis and application (9th ed.). New Jersey: Pearson; 2009.
Guo L. The moderating impact of directors’ demographic characteristics on the relationship between corporate governance and firm performance in China’s listed companies. A Thesis submitted to Licoln University, New Zealand, for the award of PhD; 2011.
Pricewaterhouse Coopers (Ghana) Limited. 2017 Ghana banking survey: Risk-based minimum regulatory capital regime: what it means for banks in Ghana; 2017. Retrieved September 18, 2019 Available:https://www.pwc.com/gh/en/assets/pdf/2017-banking-survey-report.pdf
De-Vaus D. Surveys in Social Research (5th Edition). London: UK, Routledge; 2002.
Bryman A, Bell E. Business research methods. Cambridge: UK. Oxford University Press; 2011.
Allwood CM. The distinction between qualitative and quantitative research methods is problematic. Quality & Quantity: International Journal of Methodology. 2012;46(5):1417-1429.
Hair IF, Anderson RE, Tatham RL, Black WC. Multivariate Data Analysis: A Global Perspective (7th Edition) Upper Saddle River, New Jersey, USA: Pearson Prentice Hall; 2010.
Wahua L, Tsekpo SP, Anyamele CJ. Governance and employee productivity of selected Nigerian banks: Does Gender Diversity Matter? Asian Journal of Arts, Humanities and Social Studies. 2018;1(1):19-39.
Wahua L, Ahlijah Y. Business intelligence costs and firm performance: Evidence from selected top ECOWAS’ banks. Journal of Economics and Trade. 2020;5(1):1-17.
Yang T, Yan M. The corporate shared value for sustainable development: An ecosystem perspective. Sustainability. 2020;12(2348):1-16. DOI: 10.3390/su12062348
Dobre. Employee motivation and organizational performance. Review of Applied Socio- Economic Research. 2013;5(1):53-60.
Choi J, Wang H. Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal. 2009;30(8):895-907.
Ayuso S, Rodriguez MA, Garcia-Castro R, Arino MA. Maximizing stakeholders' interests: An empirical analysis of the stakeholder approach to corporate governance. IESE Business School Working Paper No. 670; 2007.
Klapper L, Love I. Corporate. governance, investor protection and performance in emerging markets. Journal of Corporate Finance. 2004;10:703–728.
Garay U, González M. Corporate governance and firm value: The case of Venezuela. Corporate governance: An International Review. 2008;16(3):194-209.
Ogbuozobe F. A consideration of the impact of the companies and allied matters act (1990) and the insurance act (2003) on the board of insurance companies in Nigeria – part 2; 2009. DOI: 10.1108/17542430911005945
Ogbechie C, Koufopoulos DN. Corporate governance and board practices: a Nigerian perspective; 2010. Available:https://ssrn.com/abstract=1570247
Olayiwola WK. Practice and standard of corporate governance in the Nigerian banking industry. International Journal of Economics and Finance. 2010;2(4):178-189.
Wanyama FO, Develtere P, Pollet I. Reinventing the wheel? African cooperatives in a liberalized economic environment. Annals of Public and Cooperative Economics. 2009;80(3):361-392.
Sejjaaka S. Corporate mandatory disclosure by financial institutions in Uganda in V. Murinde (Ed.), accounting and corporate financial management in emerging markets, Research in Accounting in Emerging Economies. 2007;7(1):123-148.
Adu-Amoah A, Tsamenyi M, Onumah JM. The influence of social and political relations on corporate governance systems: the case of rural banks in Ghana. Research in Accounting in Emerging Economies. 2008;8(1):311-333.
Tsamenyi M, Uddin S. Corporate governance in less developed and emerging economies. Emerald Group Publishing Limited: Bingley; 2007. Available:https://doi.org/10.1016/S1479-3563(08)08011-0
Rwegasira K. Corporate governance in emerging capital markets: whither Africa? Corporate Governance: An International Review. 2000;8(3):258-267.
Okhmatovskiy I, David RJ. Setting your own standards: Internal corporate governance codes as a response to institutional pressure. Organization Science. 2012;23(1):155–176.
Davani G. Corporate governance and accountability in Iran; 2010. Available:http://www.theiafm.org/publications/288_CorporateGovernanceinIran.pdf.
Sanda AU, Mukaila AS, Garba T. Corporate governance mechanisms and firm financial performance in Nigeria. Africa Economic Research Consortium, Research Paper 149, Nairobi; 2005.
Freeman RE, Wicks CA, Parmar B. Stakeholder theory and the corporate objective revisited. Organization Science. 2004;15(3):364-369.
Rodriguez MA, Ricart JE, Sánchez P. Sustainable development and the sustainability of competitive advantage: A dynamic and sustainable view of the firm. Creativity & Innovation Management. 2002;11(3):135-146.
Abrams FW. Management’s responsibilities in a complex world. Harvard Business Review. 1951;29:54-64.
Yusoff WFW, Alhaji IA. Insight of corporate governance theories. Journal of Business & Management. 2012;1(1):52-63.
Jensen MC. Value maximization, stakeholder theory and the corporate objective function. A publication of The Monitor Group and Harvard Business School; 2001.
Boatright JR. What’s wrong—and what’s right— with stakeholder management. Journal of Private Enterprise. 2006;21(2):106-130.
Wahua L. Banks’ governance, country institutions, and capital adequacy in Nigeria. Asian Journal of Arts, Humanities and Social Studies. 2020;3(1):1-14.
Behery MH, Eldomiaty TI. Stakeholders oriented banks and bank performance: Perspectives from international business management. International Journal of Commerce and Management. 2010;20(2):120-150
Ramachandran R. Financial performance and stakeholder management; 2008. Retrieved September 23, 2020 Available:http://ssrn.com/abstract=1091547
Sambo Gichira, Yusuf. Effect of Entrepreneurial skills management and funding on small and medium enterprises’ performances at the local government level in Northern Nigeria. International Journal of Academic Research in Business and Social Sciences. 2015;5(6):338- 348.
Mohammed UD, Obeleagu-Nzelibe CG. Entrepreneurial skills and profitability of small and medium enterprises (SMEs): Resource acquisition strategies for new ventures in Nigeria. Proceedings of 25th International Business Research Conference 13 - 14 January, 2014, Taj Hotel, Cape Town, South Africa; 2014. ISBN: 978-1-922069-42-9
Thaimuta JM, Moronge M. Factors affecting the performance of Matatu Paratransit venture in small and medium enterprises in Nairobi County. International Journal of Current Business and Social Sciences. 2014;1(2):1- 17.
Kamunge MS, Njeru A, Tirimba OI. Factors Affecting the performance of small and micro enterprises in Limuru town market in Kianbu County, Kenya. International Journal of Scientific and Research Publications. 2014;4(12):1-20.
Darmadi S. Board members education and firm performance: evidence from a developing economy. International Journal of Commerce and Management. 2013;23(2):113-135.
Bathula H. Board characteristics and firm performance: Evidence from New Zealand. Being a thesis submitted to Auckland University of Technology in fulfillment of the requirements for the degree of Doctor of Philosophy (PhD); 2008.
Wahua L. Corporate governance, financial soundness and economic development: empirical evidence from Malaysia, Indonesia, and Turkey. Being a Paper presented at the 2nd Annual International Conference on Accounting and Finance, held at Colombo, Sri Lanka, on 25th– 27th May 2015; 2015.
Reynaud A, Thomas A. Firm's profitability and regulation in water and network industries: An empirical analysis. Utilities Policy. 2013;24(1):48-58.
Jill S, Aris S. Corporate governance and accountability. Chichester: England. John Wiley & Sons Ltd; 2010.
Asunka AB. A case for corporate governance for SMEs in Ghana. International Journal of Business and Management. 2017;12(4):168-177
Adjei LN, Oteng E, Fianu A. Accounting practices and control systems of small and medium size entities: a case study of Techiman Municipality, Journal of Finance and Accounting. 2014;2(3):30-40. DOI: 10.11648/j.jfa.20140203.11
Lokhande. M. Financial inclusion: options for micro, small and medium enterprises. Synergy. 2011;9(2):39–50.
Ghana Statistical Service. Integrated business establishment survey, regional spatial business report. Accra: Ghana. Ghana Statistical Service; 2016.
Amoah SK, Amoah AK. The role of small and medium enterprises (SMEs) to employment in Ghana. International Journal of Business and Economics Research. 2018;7(5):151- 157. DOI: 10.11648/j.ijber.20180705.14
Creswell JW. Research design: Qualitative, quantitative, and mixed methods approaches. 3rd. SAGE Publications Ltd; 2009.
Trading Economics (n.d.). Ghana – total businesses registered. Retrieved 10 February 2018 Available:https://tradingeconomics.com/ghana/total-businesses-registered-number-wb-data.html
Abor J, Biekpe N. Corporate debt policy of Small and Medium Enterprises in Ghana: University of Stellenbosch, South Africa; 2005.
Gay L, Mills G, Airasian P. Educational research: Competencies for analysis and application (9th ed.). New Jersey: Pearson; 2009.
Guo L. The moderating impact of directors’ demographic characteristics on the relationship between corporate governance and firm performance in China’s listed companies. A Thesis submitted to Licoln University, New Zealand, for the award of PhD; 2011.
Pricewaterhouse Coopers (Ghana) Limited. 2017 Ghana banking survey: Risk-based minimum regulatory capital regime: what it means for banks in Ghana; 2017. Retrieved September 18, 2019 Available:https://www.pwc.com/gh/en/assets/pdf/2017-banking-survey-report.pdf
De-Vaus D. Surveys in Social Research (5th Edition). London: UK, Routledge; 2002.
Bryman A, Bell E. Business research methods. Cambridge: UK. Oxford University Press; 2011.
Allwood CM. The distinction between qualitative and quantitative research methods is problematic. Quality & Quantity: International Journal of Methodology. 2012;46(5):1417-1429.
Hair IF, Anderson RE, Tatham RL, Black WC. Multivariate Data Analysis: A Global Perspective (7th Edition) Upper Saddle River, New Jersey, USA: Pearson Prentice Hall; 2010.
Wahua L, Tsekpo SP, Anyamele CJ. Governance and employee productivity of selected Nigerian banks: Does Gender Diversity Matter? Asian Journal of Arts, Humanities and Social Studies. 2018;1(1):19-39.
Wahua L, Ahlijah Y. Business intelligence costs and firm performance: Evidence from selected top ECOWAS’ banks. Journal of Economics and Trade. 2020;5(1):1-17.
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