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CAPABILITIES-STRATEGY MATCH AND BOARD
GOVERNANCE: THEIR IMPACTS ON FINANCIAL
PERFORMANCE AND ACCOUNTABILITY-EMPHASIS
OF GOVERNMENT BUSINESS ENTERPRISES
A Thesis Submitted
In fulfilment of the requirement of the
Degree of Doctor of Philosophy
CHEASETH SENG
BCom/BEc (Monash)
MCom (Adelaide)
School of Accounting and Law
College of Business
RMIT University
February 2009
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DECLARATION
I, Cheaseth Seng, declare that:
(i) except where due acknowledgement has been made, the work completed is
mine alone;
(ii) the work has not been submitted previously, in whole or in part, to qualify
for any other academic award;
(iii) the content of the thesis is the result of work which has been carried out
since the official date of the approved research program;
(iv) any editorial work, paid or unpaid, carried out by a third party is
acknowledged;
(v) and relevant ethics procedures and guidelines have been followed.
Cheaseth Seng
February 2009
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ACKNOWLEDGEMENTS
I would like to thank my senior supervisor, Professor Dennis Taylor, for his guidance
and support throughout my research. He has put a tremendous amount of time and
effort into my research from start to finish. This has included his mentoring in
selecting the research topic and context of the study, developing the research proposal,
reviewing thesis chapters and administrative support. He has been an outstanding
supervisor – a supervisor that required only one thing from his students: their
commitment to their research. This level of support and guidance has every much
enriched my development as a researcher.
I also would like to express my appreciation to my second supervisor, Associate
Professor Prem Yappa, for his assistance in finalising my thesis.
Also I am grateful for the facilities and funding provided by both University of South
Australia and RMIT University during my candidature.
Lastly, I would like to express thanks to my parents, Yi Kim Seng and Tau Vantha,
and brother and sister, Seng Samreth and Seng Seyla, for believing in me and
provided advice and support throughout my candidature.
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KEY ABBREVIATIONS
ERR: economic rate of return
Financial performance: economic rate of return
ACCBTY: Accountability-emphasis: management’s emphasis on processes and
systems put in place for discharging managerial and public accountability
expectations and requirements
CSM: organisational capabilities-strategy match or alignment
BGI: board governance index
NED/NEDs: proportion of non-executive directors
PRD/PRDs: proportion of politically-linked (politically-related) directors
FLD/FLDs: proportion of financial-literate directors
RBV: Resource Based View
I-O: inside-out capabilities
O-I: outside-in capabilities
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TABLE OF CONTENTS
LIST OF TABLES ix
LIST OF FIGURES xii
ABSTRACT xiii
CHAPTER ONE: INTRODUCTION 1
1.1 Introduction 1
1.2 Research problems 1
1.3 Research questions and objectives 3
1.4 Motivation and significance of the study 4
1.5 Thesis organisation 5
CHAPTER TWO: LITERATURE REVIEW 7
2.1 Introduction 7
2.2 Literature review on corporate governance 7
2.2.1 The nature and theoretical foundations of corporate governance 7
2.2.2 Corporate governance mechanism and corporate governance index 12
2.2.3 Empirical findings: corporate governance studies and organisational
performance 19
2.2.4 Normative discussions and empirical studies on behaviour of board of
directors 30
2.3 Literature review on organisational capabilities and strategy 40
2.3.1 Organisational capabilities and competitive advantages 40
2.3.2 Strategy, strategic typology and congruence theory 42
2.3.3 Empirical studies on the congruence or fit relationship between
capabilities and Miles and Snow’s strategic typology 51
2.4 Literature review on public sector accountability 59
2.4.1 Nature and theoretical foundations of accountability 59
2.4.2 Dimensions of Accountability 60