Factors influencing directos’ decision making effectiveness in state owned enterprises in Tanzania.

The purpose if the study was to investigate factors influencing directors’ decision making effectiveness in state owned enterprises in Tanzania. In particular, it was centered at accomplishing specific objectives such as identifying factors affecting effectiveness of directors in decision making, indicating strategies to enhance effectiveness of directors in decision making, intervening factors that may affect effectiveness of directors in decision making. The study was informed by the agency theory. The researcher adopted a qualitative research design. The population of the study comprised of one hundred and ninety two (192) directors from the boards of thirty two (32) state owned enterprises. Data was collected by the use of questionnaires which had both closed and open ended questions. Data was received from 91 respondents, representing 84% response rate and analyzed using descriptive statistics with the help of Statistical Package for Social Sciences (SPSS). The researcher identified input factors such as director’s remuneration. Skills. Experience and board diversity and also process/attribute factors like induction/capacity building, performance evaluation of the board, board committees, board cohesiveness and director’s independence. The directors were asked to rate their opinion on the indicated factors basing on their knowledge and exposure; and according to the observation these factors were seen to support directors’ decision making effectiveness. The findings suggest that there is a need to ensure appointment of directors to consider relevant knowledge of the key sector, skills and experience to enable the directors to be effective in decision making. However, the appointing authorities of chief executive officer and chairman of the boards should be separated to enhance independence in decision making. The issue of legal and regulatory frame work also needs to be reviewed and structured in a way that minimizes inconveniences which may lead to inefficiencies of the directors’ decision making effectiveness.