Original Research

The effect of the economic crisis on pay-performance link in South African state-owned enterprises

Magda Bezuidenhout
South African Journal of Business Management | Vol 52, No 1 | a1747 | DOI: https://doi.org/10.4102/sajbm.v52i1.1747 | © 2021 Magda Bezuidenhout | This work is licensed under CC Attribution 4.0
Submitted: 23 August 2019 | Published: 22 February 2021

About the author(s)

Magda Bezuidenhout, Department of Human Resource Management, School of Management Sciences, College of Economic and Management Sciences, University of South Africa, Pretoria, South Africa

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Purpose: The dissatisfaction with executive remuneration worldwide has increased because it is generally believed to have been instrumental to the 2008 Global Economic crisis. Central to this is the apparent unsatisfactory relationship between business performance and chief executive officer (CEO) remuneration. The primary aim of this study was to compare the pay-for-performance association between CEOs’ remuneration and state-owned entity performance before, during and after the economic crisis. It did so by assessing the chief executive remuneration link with state-owned enterprise performance from the period 2006 to 2014.

Design/methodology/approach: Twenty-one schedule 2 state-owned enterprises in South Africa. This quantitative, longitudinal study, obtained secondary data from the annual reports of state-owned enterprises from the period 2006 to 2014. Ordinary least square multiple regression analysis was used as the principal statistical method.

Findings/results: The findings indicate that the link between chief executive remuneration and state-owned entity performance demonstrated different patterns in the pre- and post-crisis periods.

Practical implications: State-owned entity remuneration committees should place more emphasis on the financial efficiency measurements to enhance efficiencies in South African state-owned enterprises. Shareholders and regulators should take cognisance of measures to be used to assess the potential performance of state-owned entities, through executive remuneration, especially during an economic crisis. Findings could furthermore be of importance to other academics investigating this phenomenon.

Originality/value: This research provides additional knowledge to the limited research available on SOEs in South Africa. Further, it reveals that an economic downturn affects the link between CEOs’ remuneration and SOE performance. This addresses a knowledge gap concerning the pay-for-performance link in South African SOEs and in emerging economies in general.


executive remuneration; fixed pay; state-owned enterprises; total remuneration; South Africa.


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