The moderating role of total cost of ownership in procurement transformation in enhancing the efficiency of Government-Linked Companies / Norsariah Abdul Rahman

GLCs have established as the backbone of the Malaysian economy. GLCs have significant role in the sectors such as telecommunications, public transport, airlines, banking and financial institutions. As the Government is aiming towards a strong, efficient and more resilient force for GLCs to face future competition in the business world, the Government-Linked Companies Transformation (GLCT) programme was introduced in May 2004. In relation to the performance of GLCs, this study investigates the relationship between procurement cost management and efficiency in GLCs. Therefore, two methodologies were employed in this study. First methodology is the Data Envelopment Analysis (DEA) to scrutinise the three types of efficiency; Technical Efficiency (TE), Pure Technical Efficiency (PTE) and Scale Efficiency (SE). this type of efficiencies are then the dependent variable for this study. Then, panel data analysis was adopted by using the Generalised Method-of-Moment (GMM) estimator. The proxies for procurement cost management are Total Asset Turnover (TATO), Fixed Asset Turnover (FATO), Inventory Turnover (ITO), Accounts Receivable Turnover (ARTO), Capital Expenditure (CAPEX) and Operational Expenditure (OPEX). The study determines to find the significant relationship between TATO, FATO, ITO, ARTO, CAPEX and OPEX with TE, PTE and SE. For PTE, only ITO has positive relationship. The rest of the proxies have negative relationship. When it comes to SE, FATO has negative relationship with SE but other proxies have positive relationship with SE.