Investigating Factors Contributing to the Underperformance of State-Owned Enterprises: Evidence from Zambia Railways Limited

Abstract

State-Owned Enterprises play a strategic role in national development through the provision of critical infrastructure and public services. However, many state-owned enterprises in developing economies continue to experience operational, financial, managerial, and institutional challenges that undermine their performance. This study investigated the factors contributing to the underperformance of State-Owned Enterprises using Zambia Railways Limited as a case study. Specifically, the study examined the influence of maintenance practices, funding adequacy, leadership practices, competition from road transport, and government policies and regulatory frameworks on ZRL’s performance. The study adopted a pragmatic research philosophy and a convergent parallel mixed-methods design. Quantitative data were collected from 109 respondents using structured questionnaires and analyzed using descriptive statistics, Spearman’s correlation and multiple regression in IBM SPSS Version 26. Qualitative data were collected through interviews, document review, and stakeholder consultations and analyzed using thematic and content analyses. Findings from both strands were integrated through triangulation. The findings revealed that ZRL’s underperformance is driven by interrelated technical, managerial, market, and regulatory challenges. Maintenance, leadership, competition from road transport, and government policies significantly influenced ZRL's performance. Maintenance challenges included aging infrastructure, inadequate preventive maintenance, and frequent rolling stock breakdowns. Leadership effectiveness emerged as the strongest predictor of performance, while competition from road transport reduced ZRL’s market share and competitiveness. Policy inconsistencies and weak enforcement further constrained performance. Although funding was widely perceived as inadequate, its statistical effect was not significant, suggesting that resource utilization and financial governance are equally important. The study contributes to knowledge in three dimensions. Theoretically, it adapts and integrates Total Productive Maintenance Theory, Contingency Theory, Institutional Theory, and Porter’s Competitive Forces Model into a framework for SOEs railway reform. Methodologically, it demonstrates the value of a convergent mixed-methods approach and triangulated analysis. CSC11003 Page vii of 373 NIZAH LAWRENCE MUTAMBO Practically, the study proposes a multi-level reform strategy integrating institutional readiness, operational efficiency, market responsiveness, stakeholder engagement, and strategic transformation, supported by maintenance modernization, transformational leadership, sustainable financing, regulatory reforms, and multimodal transport partnerships to improve the performance of Zambia Railways and similar state-owned enterprises.