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Volume :20 Issue : 78 1995      Add To Cart                                                                    Download

BOARDS OF DIRECTORS OF PUBLIC ENTERPRISE IN KUWAIT: A FIELD STUDY ON ITS NATURE, STRUCTURES AND COMPOSITION

Auther : By: Dr. Mohamed Amin Odah

2Public Enterprise is a hybrid organization incorporating some features and attributed of private enterprises as well as public agencies, yet having a distinctive identity of its own with its dual-dimensional objectives, functions and responsibilities. The enterprise dimension implies facing a market test of the acceptability of their product and the drawing up of commercial accounts and using the concept of investment and return. It also has a public dimension, which implies not only facing public ownership and control but also being responsive to public purposes and public interest. It points not only to the importance of managing public enterprises with management tools and a philosophy different from those used in both traditional administrative agencies and private enterprises, but also to the importance of administrating public enterprises by professional managers who have acquired the technical and administrative skills required by the enterprise dimension as well as being socially and politically responsible of society at large required by the public dimension. That is managers in public enterprises have to deal with public enterprises’ dual dimensions and reconcile their dual obligation in order to operate on a sound business-like enterprise and functioning – at the same – as an instrument of national development and social policy. It is widely recognized that the success of public enterprise in achieving its purposes as well as playing the roles it was created for, depends upon to a great management and the enhancement of necessary management capabilities.

The research, therefore, was guided by the belief that an investigation carried by a field study focusing on the nature, structure and composition of Board Directors as well as its size and the duration and renewal of its term of appointment could provide some of the empirical evidence needed to improve the performance and internal operation of public enterprise. More precisely, the research objectives are as follows:

Identifying prominent characteristics, features and demographic profile of Board Members.

    • Recognizing ways and means of recruiting an appointing Board Members (Part-time as well as full-time members), representing government as well as the private shareholder, members bearing executive responsibilities as well as those who do not.

    • Recognizing the nature, structure and composition of Board of Directors as well as its size and the duration and renewal of its term of appointment.

    • Recognizing the relationship between Board Members’ opinions and views and some variables related to the board’s composition such as outsiders vis-à-vis insiders and part-timers vis-à-vis full-timers and/or some personal variables such as academic background, training, previous experience, sex and age.

    • Detecting the differences in Board Members’ opinions and views related to the Board’s composition among the different forms of Kuwaiti public enterprises, i.e. the so-called autonomous public corporations, public companies and mixed companies (at least 50% of capital paid by government).

The significance of the research is that it is - to the best of the writer’s knowledge – the first study of its kind to be undertaken concerning Kuwaiti public enterprises. Data for the study were collected via structured questionnaire and interviews carried out with all autonomous public corporations, all fully owned public companies, all partly-owned mixed companies (at least 50% of capital paid by government) representing 100% of Kuwaiti public enterprises. In relation to each of the enterprises included, an attempt was made to approach all Board Members including Board Chairman, Deputy Board Chairman, Executive Directors, members representing the Government and members representing the Private Sector in the case of the partly-owned enterprises. Board Members who participated and returned the questionnaires consisted of 152 persons representing 51.9% of total population.

The findings of the study indicated that Kuwaiti public Enterprises’ Board Members acquire certain features and characteristics, which could be conductive to the enhancement of the operation and performance of public enterprises. However, the full benefit of these features and characteristics is dependent upon modifying and developing the circumstances, constraints and systems under which the Boards have to operate. Among the many conclusions reached by the study are the “politicized” Boards and the current inadequacy in membership composition which consists mainly of part-timers and outsiders who often lack relevant managerial expertise and experience and/or who bring into the enterprises’ decision-making process an orientation that best suits a government bureaucracy rather than a business, like enterprise, inadequacy in the training process of Board Members and the absolute renewal of Board membership which could adversely affect the performance of Board Members and could lead to the concentration of power and the prevalence of power centers and administrative corruption.

Based upon the above findings, the study concludes with some constructive suggestions and recommendations that may contribute to enhancing the effectiveness, roles and functions of Board Members.

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