Original Research

Assessing the relative appropriateness of the credit management policies of South African universities of technology

Gauda J. Maseko, Merwe Oberholzer, Susanna L. Middelberg
Journal of Economic and Financial Sciences | Vol 12, No 1 | a460 | DOI: https://doi.org/10.4102/jef.v12i1.460 | © 2019 Gauda J. Maseko, Merwe Oberholzer, Susanna L. Middelberg | This work is licensed under CC Attribution 4.0
Submitted: 25 February 2019 | Published: 26 September 2019

About the author(s)

Gauda J. Maseko, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Potchefstroom, South Africa
Merwe Oberholzer, WorkWell Research Unit, Faculty of Economic and Management Sciences, North-West University, Potchefstroom, South Africa
Susanna L. Middelberg, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Potchefstroom, South Africa


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Abstract

Orientation: The study explores credit management on the South African higher education landscape in the context of the institutional theory.

Research purpose: To calculate a best practice frontier to assess the extent to which universities’ credit management policy as an institutional resource is appropriate for its environment.

Motivation for the study: The study was undertaken to investigate how the institutional environment influences the development of formal university structures.

Research design, approach and method: A parallel mixed-method research design was followed to collect both qualitative data and quantitative data: document analysis to assess five universities of technology’s credit management policies and quantitative data testing 1392 senior students’ perspectives on the credit management policies of these five universities of technology.

Main findings: The lesson learnt from this study is that the more aggressive the credit management policy, the more the students rated it as appropriate (fair, understandable and accurate). Furthermore, contrary to extant literature, no evidence was found that a stringent or aggressive credit management policy is experienced as rigorous.

Practical/managerial implications: Universities of technology may apply aggressive credit management policies without the fear that they will be perceived as rigorous.

Contribution/value-add: Policymakers should note that students desire a credit management policy that: (1) is well communicated to them; (2) encourages them, by granting discounts, to do early settlements of debt; (3) is strictly implemented; and (4) is strict with regard to the collection and recovery of (deferred) debt.


Keywords

accounts receivables; aggressive and conservative credit management; institutional theory; universities of technology; South Africa; lenient; moderate and stringent policies

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