Performance Contract and Performance Evaluation of State-Owned Enterprises: Insights from the Goal Setting Theory

Abstract

Performance contract (PC) is one of the initiatives under the impulse of reforming State-Owned Enterprises (SOEs) to among other things, ensure improved SOE performance. Studies however show mixed results in relation to improved SOE performance, and the general perception is that targets in PCs are not challenging enough. Drawing on the goal setting theory, this article provides further theoretical explanations for the application and impact of PCs using evidence from Ghana, the first Anglophone nation in Africa to adopt and implement the PC reform programmes. Relying primarily on data from PCs, SOE evaluation reports, and interviews, findings suggest that the quality of targets in PCs has been improving over the years. Moreover, the goal setting theory element, commitment, is crucial to achieving desirable outcome from PC as a performance evaluation tool.