CHAPTER I

INTRODUCTION

1.0 Introduction
The chapter outlines the background to the study, the statement to the problem, the aim of the
study and the research objectives and questions. It also gives justification for the study, discusses
its delimitations and limitations, presents the assumptions made and concludes with a summary.

1.1 Background to the Study

In an era of increased competition and economic advancements, organizations are increasingly
recognizing the relevance of having a robust internal control systems to improve operational
effectiveness. Over the years, internal controls have been an essential part of corporate
governance and financial management to increase accountability, protect assets and enhance
operations (Committe of Sponsoring Organisation of the Treadway Commission, 2013).
Traditional control mechanisms were often fragmented, focusing on financial reporting and
compliance than a holistic approach operational effectives and risk management (Maryanti &
Alabdullah, 2021). As explained by (Alabdullah & Eny , 2021) these traditional systems had
weaknesses such as weak enforcement, departmentalization and shortfall with advancements in
business risks made a hindrance to move towards structured approach and more robust internal
control framework. As organizations face increasing regulatory scrutiny and operational
complexes, internal controls have grown from governing financial oversight to cover strategic
decision-making, fraud prevention and process optimization (Munteanu & Zuca, 2020).

According to (Whittington & Pany, 2022) Internal control system, are described as all of the
policies and procedures of management that have been put in place to ensure the efficient
functioning of the business. Internal controls, the processes, policies, and procedures that an
organization employs to offer reasonable assurance on the reliability of financial reporting,
adherence to laws and regulations, and effectiveness of operations, are a central element in risk
mitigation and performance enhancement (COSO, 2013; Almeida & Cunha, 2021). (Arens, et al.,
2023). The objective is to achieve the established goals of operational excellence, financial
integrity, regulatory adherence and fraud prevention and risk management objectives to a
reasonable extent. Companies with strong internal controls, report higher profitability and lower
operating expenses. (Poppy , et al., 2024) points out that effective internal controls ensure
compliance with regulations and builds trust among stakeholders leading to better governance.
Findings from (KPMG, 2023) found that organizations with sound internal control frameworks
have fewer financial discrepancies and subsequent bottom-line impact. These sound internal
controls provide process standardization and enhancement, which helps in achieving productivity
(AICPA, 2023). (Chingwaro, 2022) showed that well-designed internal control yields better
resource allocation thereby boosting operational performances.

Virtually around the globe, poor internal control systems have emerged as a root cause for many
of the major issues in different organizations, which led to financial mismanagement and
corruption with entire organization collapse. Worldwide, operational performance challenges in
organizations have been a critical issue and many scandals have shown the importance of strong
internal controls (Markham, 2022). The Enron (2001) and WorldCom (2002) scandals had led to
United States to adopt to Sarbanes-Oxley Act - passed in 2002 that forces companies to have
strong internal controls over financial reporting including undergoing annual audits measuring
their operational effectiveness (Wang, 2022) . International Federation of Accountants (IFAC)
2020 report notes that companies do need effective internal control systems to make sure they
conform to International Financial Reporting Standards (IFRS). With the introduction of SOX,
publicly listed companies were to follow the orders to comply with its provision, including the
establishment of an external audit committee and an internal audit function and assess the
effectiveness of their internal controls annually (Doxey, 2019).

In the African context, the importance of internal controls has emerged as a matter of increasing
concern with organizations looking to improve operational effectiveness and competitiveness.
Researchers like (Nwosu, et al., 2024) note that most African organizations are faced with poor
internal controls that can lead to inefficiency and mismanagement of funds. For instance, the
Nigerian banking industry has seen several cases of fraud that led the regulators to implement
more stringent internal control measures. The varying cultural norms of the continent also work
to render standardization of internal control systems difficult, as observed with differing
practices among nations such as Ghana and Kenya.

With a Southern Africa focus, the region has seen considerable economic transformations
necessitating review of internal control procedures. The Southern African Development
Community (SADC) stressed the importance of good governance structures to assist in
enhancing operational delivery within member countries. The King IV Report on Corporate
Governance in South Africa is a guide and recommends appropriate internal controls for
transparency and accountability (SADC, 2023). Literature demonstrates that those companies in
Southern Africa with sound systems of internal controls are more likely to survive economic
slumps, as demonstrated by Shoprite, which has managed to put in place strict controls in order
to ensure profitability and efficiency in operations (Badal, 2021) . (Ziorklui, et al., 2024) suggest
that many organizations in Southern Africa are challenged by the effectiveness of internal
controls due to limitations such as lack of funds, inadequate management commitment,
inadequate employee training, inadequate governance and corruption.

To narrow down to Zimbabwe, the economic and business environments the wholesale sector
operates presents unique challenges, requiring robust internal controls to mitigate risks and
support operational excellence. According to (Chiwara, 2021) and (Ncube & Ndou, 2022). The
country has witnessed high inflation, currency instability affecting business pricing strategies,
cost control and financial planning making internal controls necessary for business sustainability.
The Zimbabwean government has put several regulations in place to improve corporate
governance such as the Public Finance Management Act and Companies and Other Businesses
Entities Act (Government of Zimbabwe;2019). However, weak enforcement of these regulations
has resulted in poor internal control systems leading to substandard performance by businesses in
the private and public sector (Munyanyi, 2022).

(Chikoko & Nyoni, 2021) explained that adequate internal control system must be in place to
cushion financial risks and improve organizational performance in Zimbabwean entities, as they
pointed out that companies with robust internal controls can respond more effectively to the
challenges brought about by hyperinflation and policy changes. (Moyo & Chivanga, 2022) also
underscore that not only strong internal controls drive business performance but they also
contribute to accountability and transparency, which is needed for establishing stakeholder trust
in Zimbabwean business environment. According to (Dube & Mavhiki, 2023) and (Ndlovu &
Moyo, 2024) Zimbabwean companies face unique socio-economic difficulties that prescribe
tailored internal control frameworks responsive to its local operating environments, especially in
wholesale and retail.
Entities in Zimbabwe, including Bhola, OK Zimbabwe Limited, Mahommed Mussa
Wholesalers, and N. Richards Group, are facing strong competition from informal vendors, high
inflation, volatile exchange rates, and policy inconsistencies (Chikoko & Nyoni, 2021). As a
result, some wholesalers and supermarkets have encountered operational challenges, leading to
branch closures and downsizing; for example, N. Richards Group and OK Zimbabwe have shut
some locations, while Choppies Zimbabwe exited the market due to operational difficulties.
Research indicates that internal controls significantly influence organizational performance,
either positively or negatively. Studies by (Sofia & Augustine, 2022) and (Shad, et al., 2021)
highlight that effective internal controls enhance operational performance. Similarly, (Mottoh &
Sutrisno, 2023) discovered that robust internal control systems positively impact performance.
However, it remains unclear why some organizations continue to experience declining
performance despite having internal control frameworks in place.

Moreover, failure to implement the procurement centralization in a proper way in 2018 exposed
weaknesses over planning, stakeholder participation and management change suggesting lack of
proper procurement controls such as clear authorization process and adequate communication
and risk management. The failure to meet key financial obligations such as rents due, taxes due,
loan repayments point out weaknesses in financial controls, poor budgeting, poor cash flow
forecast and even weaker board coverage. According to (Commitee of Sponsoring Organizations
of the Treadway Commissions, 2013) pointed out that optimal internal controls are involved in
ensuring that financial planning works in aligns with the organization's strategic objectives,
minimizing the risk that leads to liquidity crisis and financial distress (Arens, et al., 2023).

Despite the existence of robust frameworks in place such as the COSO, organizations including
those in the wholesale and retail industry still struggle with operational and financial
inefficiencies. That in turn raises important questions about how organizational failure is from
poor management execution or inherent weaknesses in the internal control framework. Although
the existing research widely attributes operational failures to management’s inabilities to enforce
polices, little attention has been given to assessing the impact of internal controls in enhancing
operational performance and some has treated internal controls as a single, cohesive system. This
research aims to focus more on how the enforcements of internal controls can enhance
operational performance at Metro Hypermarket Wholesalers.
1.2 Statement of the problem
The operational performance of Metro Hypermarket has been depreciating rapidly from 2017 to
2023, culminating in insolvency. A review of their audited accounts and findings have pointed
out weaknesses in the implementation, alignment and compliance to their internal controls as
kick in factors to performance deficits. Therefore, this research aims to examine their internal
controls to see if there are limitations hindering them to enhance their operational performance.
There is great need to assess the impact of internal controls on operational performance within
the wholesale and retail sector in Zimbabwe.

1.3 Research Objectives

 To identify internal controls that are currently being employed by Wholesalers in
Zimbabwe.
 To evaluate the relationship between internal controls and operational efficiency
 To identify challenges faced in the implementation of internal controls
 To identify strategies to enhance operational performance at Metro Hypermarket through
internal controls.

1.4 Research Questions

1. What internal controls are currently being employed by wholesalers in Zimbabwe?
2. What is the relationship between internal controls and operational efficiency?
3. What challenges are faced in the implementation of internal controls?
4. What strategies can be adopted to enhance operational performance through internal
controls at Metro Hypermarket?

1.5 Significance of the study

The significance of the study lies in its contribution to both academic research and practical
implications for local and global wholesale and retail businesses.
1.5.1 The Researcher
This study is extremely valuable to the researcher since it offers a chance to hone important
research abilities, such as gathering, analyzing, and interpreting data. The researcher learns a
great deal about internal control systems and how they might improve organizational efficiency
by examining how internal controls affect Metro Hypermarket's operational performance. Since
it gives the researcher skills that they can use in future positions in accounting, auditing, or
business management, this information is not only advantageous academically but also
professionally. Furthermore, by adding to the body of knowledge already in existence, especially
with regard to Zimbabwe's retail industry, the study enables the researcher to build credibility
and represent themselves as an expert in the topic.

1.5.2 Midlands State University (MSU) the acade05c researchers

The study is important to the university since it adds to its portfolio of academic and research
work, especially in the areas of business management, accounting, and auditing. By tackling a
practical problem in Zimbabwe's retail industry, the study improves the university's standing as a
source of significant and pertinent research. Additionally, it is a useful tool for researchers and
students in the future who might study related subjects, enhancing the academic program.
Additionally, the study creates prospects for possible relationships between the university and
businesses such as Metro Hypermarket, which may help students by providing them with
research opportunities, internships, and hands-on experience with real-world business
difficulties.

1.5.3 Metro Hypermarket Private Limited Company

This study is very important to Metro Hypermarket because it offers practical information on
how well its internal controls work and how they affect operational performance. The study
provides useful suggestions to increase effectiveness, lower risks, and boost overall performance
by highlighting the advantages and disadvantages of the current control systems. Cost reductions,
higher profitability, and a more competitive position in Zimbabwe's retail sector can result from
this. Furthermore, by assisting the company in reducing risks like fraud, mistakes, and
inefficiencies, the study can protect its assets and reputation. In the end, the study's conclusions
can help Metro Hypermarket's management make wise choices that will improve stakeholder
confidence, fortify internal controls, and ensure long-term operational success.
1.6 Assumptions
The ensuing presumptions will be made:

 It will be assumed that each study participant shared their thoughts, observations, and
feedback voluntarily, independently and to the best of their ability.
 The study assumes that all ethical considerations, such as confidentiality, informed
consent, and data protection, will be adhered to throughout the research process.
 It is assumed that Metro Hypermarket has implemented internal control systems in
accordance with recognized standards and practices
 It is assumed that the respondents (managers, employees) have a basic understanding of
internal control systems and are capable of providing meaningful input regarding their
effectiveness.
 It is assumed that the research will be completed within the timeframe allocated by
Midlands State University (MSU).
 The study assumes that Metro Hypermarket is a representative case of the wholesale and
retail sector in Zimbabwe. Findings from this study may, therefore, provide insights that
could be applicable to other similar organizations in the industry

1.7 Delimitations of the study

Geographically, the research was confined to Metro Hypermarket in Zimbabwe, ensuring depth
and specificity but limiting generalizability to other regions or organizations. The researcher
chose the head office, Msasa Harare branch where organization strategic decisions are made. The
study was delimited by employing both qualitative and quantitative methodologies to collect
data, ensuring a comprehensive understanding of the impact of internal controls on operational
performance at Metro Hypermarket. The researcher consulted studies from 2020 to 2023 and
collected data from employees in the audit department, frontline employees, IT personnel
and top managers, as these groups are directly involved in implementing and monitoring internal
controls. The scope was limited to examining internal controls and operational efficiency, using
the COSO framework and indicators such as process efficiency and customer satisfaction, while
excluding external factors like market conditions.
1.8 Limitations
Although the researcher encountered some difficulties obtaining private information for the
company utilized as a researcher case study, MSU helped her in obtaining authorization from
Metro Hypermarket officials. The study heavily relies on secondary data sources, such as audited
financial statements and reports. This dependency may introduce biases or inaccuracies, as the
data may not fully capture the operational realities or nuances of the organizations involved.

The researcher encountered challenges in data collection due to shift patterns and daily
operational responsibilities, staff members were sometimes unavailable. To overcome this, the
researcher rescheduled the time for data collection to suit staff’s availability.

The researcher discovered that it was difficult to evaluate the influence of each component on
operational performance due to complexity and departmental variation of internal control
systems. Instead of trying to examine every aspect of the control mechanisms in every
department, the researcher concentrated on key components of internal control, such as
authorization processes, monitoring systems, and segregation of roles, in order to solve this.

The researcher bears some expenses on transport cost, printing, internet and communication
related to this project. Fortunately, though, she budgeted ahead for the project using self-funding
from her own savings.

1.9 Definitions of terms

Internal controls – defined as ‘systematic measures implemented by an organization to ensure the
accuracy and reliability of its financial reporting, compliance with laws and regulations and the
effectiveness and efficiency of its operation’ (Whittington & Pany, 2022)

Operational performance – refers to how effectively and efficiently an organization utilizes its
resources to achieve their goals and deliver value to its stakeholder (Alhassan, 2023)

Corporate rescue – according to (Zimbabwe Insolvency Act, chapter 6: 07) refers to measures
put in place to aid recovery of a financially distressed company.
Risk management – the process of identifying, assessing, and mitigating potential threats to an
organization’s objectives. It involves balancing risk and reward by developing strategies that
maximize opportunities while minimizing potential losses (Kaplan & Mikes, 2012). (Hopkin,
2018) It integrates with organizational processes, ensuring that risks are managed in alignment
with broader goals.

1.10 Summary
The chapter provided an initial overview of the study and mapped out the overall aspects of the
study. It situated the study within local, regional and global experiences. The study identified the
weak internal controls and operational inefficiencies as the key pitfalls affecting organizational
performance. Internal control systems were highlighted as pivotal in enhancing accountability,
efficiency, transparency and overall operation performance. This will provide a foundation for
the following chapter where literature review will be employed to analyze the efficacy of internal
controls in improving operation performance.
 CHAPTER II
LITERATURE REVIEW

2.0 Introduction
The purpose of this chapter is to provide a comprehensive review of existing literature related to
internal controls and their impact on operational performance. Effective internal control systems
are essential for organizations to enhance efficiency, prevent fraud, and ensure compliance with
policies and regulations. This chapter explores key concepts, theoretical frameworks, empirical
studies highlighting the significance of internal controls in improving operational performance
and finally a research gap.

2.1 Defining internal controls

According to COSO 2013, internal control refers to a process or procedures, effected by an
entity’s board of directors, management and other personnel, designed to provide reasonable
assurance regarding the achievement of objectives in effectiveness and efficiency of operations,
reliability of financial reporting, and compliance with applicable laws and regulations.

Internal controls are a dynamic, technology driven framework of policies, procedures, and
systems designed to provide reasonable assurance regarding the achievement of organizational
objectives. These objectives include operational efficiency, reliable financial and non-financial
reporting, compliance with laws and regulations, and the mitigation of risks in an increasingly
complex and digital business environment. Internal controls leverage advanced technologies
such as AI, blockchain, and real-time data analytics to enhance monitoring, detection, and
response capabilities, ensuring adaptability and resilience in the face of emerging risks and
opportunities.

2.2 The COSO framework

A number of prominent professional organizations worked together to create the COSO

(Committee of Sponsoring Organizations of the Treadway Commission) Framework, a well-
known model for internal controls and risk management. The American Institute of Certified
Public Accountants (AICPA), Financial Executives International (FEI), the Institute of Internal
Auditors (IIA), the American Accounting Association (AAA), and the Institute of Management
Accountants (IMA) are a few of these organizations. The "Internal Control – Integrated
Framework" was published in 1992 after the framework was first created in the late 1980s.

The committee's objective was to provide a thorough and broadly applicable set of guidelines to
help businesses set up efficient internal control systems. According to (Lemann & Hao, 2022),
the COSO framework offers recommendations that cover internal control across financial
reporting, operational efficiency, and compliance with laws and regulations. It is made to be
flexible and adaptable, making it appropriate for businesses of different sizes and industries. The
framework describes five interconnected elements the Control Environment, Risk Assessment,
Control Activities, Information and Communication, and Monitoring Activities that cooperate to
improve organizational effectiveness.

Fig 1 COSO framework

Sour
ce: COSO internal control framework (2013:2)

Integrity, moral principles, and management's dedication to internal control are all part of the
control environment, which establishes the tone of a business. It highlights how crucial it is to
establish a positive control culture across the entire company (Lemann & Hao, 2022).
Risk assessment includes locating and evaluating both external and internal hazards that may
have an influence on achieving goals (Lemann & Hao, 2022). In order to effectively manage
risks, it assists companies in understanding their risk landscape, prioritizing risks, and putting in
place the necessary controls (Almeida & Cunha, 2021).

The policies, processes, and practices put in place to lessen identified risks are known as control
activities. Segregation of tasks, authorization and approval procedures, physical controls, and IT
controls are some of these activities (Lemann & Hao, 2022). Control actions are used as
precautionary, investigate or remedial actions to mitigate hazards.

(Lemann & Hao, 2022) stipulates that information and communication component ensures that
relevant data is captured, processed and disseminated to support decision-making and operational
processes. It includes, accurate and timely non-financial and financial reporting, internal and
external communication channels and overall flow of information within the organization
(Gyimah, et al., 2022)

Monitoring is a continuous procedure that evaluates the internal control systems' effectiveness
and robustness. Its primary focus is on conducting routine reviews, assessments, and evaluations
to make that controls are functioning as intended. Monitoring operations identify weaknesses in
control, fix them, and offer input for ongoing development (Lemann & Hao, 2022).

The COSO model demonstrates how these components work together as a cohesive system to
produce an integrated internal control system. Its purpose is to help businesses achieve their
objectives, effectively manage risks, and ensure operational performance.

Strength of COSO framework

The COSO framework provides a broad and integrated approach to internal controls, covering
operational, financial, and compliance objectives. According to (Higgins, 2022) the framework
ensures that internal controls are not siloed but are instead aligned with the organization’s overall
strategy and objectives. This ensures that controls are aligned with organizational goals and not
just focused on compliance.
Additionally, the framework is flexible and can be applied to organizations of all sizes and
industries. It allows organizations to tailor internal controls to their specific needs (Almeida &
Cunha, 2021). The COSO places a strong emphasis on the control environment, which includes
the tone at the top, ethical values, and organizational culture and integrates risk management into
its internal control framework, helping organizations identify, assess, and mitigate risks that
could impact their objectives (Beasley, 2022).

Weaknesses of the COSO Framework

The framework can be complex and resource-intensive to implement, particularly for smaller
organizations with limited resources. Smaller organizations often struggle with the complexity
and resource requirements of implementing the COSO framework, which can be overwhelming
without adequate support. (Almeida & Cunha, 2021).

The framework lacks detailed guidance on integrating emerging technologies, such as AI and
blockchain into internal control systems (Gyimah, et al., 2022). COSO places strong emphasis on
documentation which can lead to excessive paperwork and administrative burden.

Relevance of COSO Framework to the study

The COSO framework emphasizes that internal controls should be designed to achieve
organizational objectives, including operational efficiency and effectiveness. This aligns directly
with the study's focus on how internal controls enhance operational performance (Almeida &
Cunha, 2021). COSO also integrates risk management into its framework, helping organizations
identify and mitigate risks that could disrupt operations (Higgins, 2022). This is critical for
maintaining operational performance in the face of uncertainties.

The control environment emphasizes the importance of governance, ethics, and culture in
ensuring effective internal controls. A strong control environment fosters accountability and
transparency which is essential for operational performance (Higgins, 2022). This aligns with the
study’s focus on how internal controls enhance performance by creating a culture of
accountability.
The COSO framework's monitoring activities component makes sure that internal controls are
continuously assessed and improved, which is crucial for maintaining operational performance.
KPMG (2021) asserts that monitoring facilitates prompt modifications and aids in identifying
control gaps. Because of this, the framework is extremely pertinent to the study's focus on how
internal controls continue to affect operational performance (Almeida & Cunha, 2021).

The COSO’s framework focus on compliance, ensures that organizations adhere to laws and
regulations, which can indirectly enhance operational performance by reducing legal risks and
penalties. (Beasley, 2022) note that compliance with regulations often requires organizations to
implement efficient processes and controls, which can lead to improved operational performance

2.3 CONTINGENCY THEORY

Contingency theory emerged in the 1960s and 1970s as a response to the limitations of universal
management theories, such as classical management and bureaucratic theories, which assumed
that there was a "one best way" to manage organizations. Fred Fiedler (1964) argued that
organizational effectiveness depends on the fit between an organization’s structure, strategies
and its external environment. This marked a shift from universal principles to a more flexible,
context-dependent approach to management (Reams, 2023) . The theory was further developed
by Duncan (1972) and Thompson (1967), who emphasized that organizations must adapt their
structures and processes to align with external contingencies, such as market conditions,
technology, and environmental uncertainty. Contingency theory posits that there is no single best
way to organize or manage; instead, the optimal approach depends on various internal and
external factors (Mark & Erude, 2023).

The theory suggests that the effectiveness of an organization depends on the alignment between
its internal structures, processes, and strategies, and the external environment in which it
operates. The theory argues that there is no universal solution to organizational problems;
instead, the best course of action is contingent upon specific situational factors which includes
environment uncertainty, organizational size, technology, culture and leadership style (Burns &
Stalker, 1961) (Shala, et al., 2021).

Strengths of the Contingency Theory

(Shala, et al., 2021) contingency theory emphasizes on flexibility and adaptability making it highly
relevant in today’s rapidly changing business environment. Contingency theory provides a
framework for continuous adjustments of strategies and structures to remain competitive. (Mark
& Erude, 2023) highlight that contingency theory helps organizations to adapt their innovation
strategies to different market conditions

According to (Shenkar & Ellis, 2022) the theory can be integrated with other management
theories, such as the resource-based view, dynamic capabilities, and institutional theory, to
provide a more comprehensive understanding of organizational effectiveness. (Shenkar & Ellis,
2022) explains that contingency theory complements the dynamic capabilities framework by
providing a lens for understanding how organizations adapt to changing environments.

Weaknesses of Contingency Theory

One major weakness is being complexity and ambiguity, the theory gives special attention on
multiple factors and their interactions making it difficult to apply in practice. (Shenkar & Ellis,
2022) acknowledges this complexity sometimes leads to confusion and inefficiency in decision
making. Again, the theory’s static nature is another significant weakness, contingency theory
assumes that organizations can achieve a stable fit with their environment, but in reality,
environments are constantly changing this limits the theory’s applicability in highly dynamic and
unpredictable environments (Mark & Erude, 2023).

Relevance of Contingency Theory to the study

Contingency theory is highly relevant to the study the impact of internal controls in enhancing
operational performance as it emphasizes that there is no "one-size-fits-all" approach to
management therefore, the effectiveness of internal controls depends on how well they are
aligned to the organization’s unique circumstances, such as its size, industry, environment, and
culture. According to (Shala, et al., 2021), organizations must adapt their structures and
processes to fit their unique circumstances, and internal controls.

Another key aspect of contingency theory is that it focuses on environmental uncertainty, which
is particularly relevant to the study. (Shenkar & Ellis, 2022) points out that organizations must
continuously adapt their strategies and processes to control environmental uncertainty and
internal controls playing a pivotal role in this process. (Shala, et al., 2021) highlight that
organizations must adopt flexible strategies to remain competitive in dynamic market, this
flexibility is essential for maintaining operational efficiency in a rapidly changing environment.

2.4 AGENCY THEORY

Agency theory originated in the 1970s as a framework for understanding the relationship
between principals (owners or shareholders) and agents (managers or employees) in
organizations. The theory was formally introduced by Jensen and Meckling (1976) in their
seminal paper, theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure
(Xiangyu , 2023) and further expanded its application to various contexts. The theory is rooted in
the idea that conflicts of interest can arise when the goals of the principal and the agent diverge,
and the agent may act in ways that prioritize their own interests over those of the principal (Nina,
2023).

Information asymmetry is one of the main causes of agency problems, agents know more about
internal operations than principals do (Nina, 2023), making it is difficult for the latter to
effectively oversee performance and impose accountability. Agents having delegation of
authority increase the chances of making judgments that might not be in line with organizational
objectives and without the proper controls might make the problem worse. (Nina, 2023).

In order to lower agency costs and increase transparency, controls including independent audits,
performance monitoring systems are essential Eisenhardt (1989) cited in (Xiangyu , 2023). When
properly put into place, these systems aid in lowering the likelihood of fraud, poor management,
or inefficiencies, which eventually improves operational performance (Moloi & Marwala ,
2021).

Furthermore, the intensity of agency conflicts has been connected to modifications in ownership
and governance models, particularly in settings with inadequate internal control systems. Such
findings reinforce the necessity of tailoring robust internal control frameworks to the
organizational context in order to safeguard operational integrity (Moloi & Marwala , 2021).

Strengths of the theory

One of its key strengths is its ability to explain conflicts of interest in principal agent
relationships. The theory provides a clear framework for analyzing how diverging goals and
information asymmetry can lead to agency problems, such as moral hazard and adverse selection
(Moloi & Marwala , 2021)

Another strength of agency theory is its practical applicability in various organizational contexts.
The theory has been widely used to address real-world challenges such as executive
compensation, board governance and contract design. (Hendrastuti & Harahap, 2023) highlight
that agency theory provides actionable insights for reducing agency costs and improving
organizational performance. Agency theory also emphasizes the importance of monitoring and
control mechanisms in mitigating agency problems. (Nina, 2023) argues that effective
governance structures, such as independent boards and performance audits, can reduce
information asymmetry and ensure accountability.

Agency theory can be used to address the challenges of managing digital transformation
initiatives, such as aligning the interests of managers and shareholders in long-term investments.
This adaptability ensures that agency theory remains relevant in addressing contemporary
organizational challenges (Xiangyu , 2023).

Weaknesses of Agency Theory

Despite its strengths, agency theory has narrow focus on economic incentives. The theory
assumes that agents are primarily motivated by self-interest and financial rewards, overlooking
other factors, such as intrinsic motivation, organizational culture, and social norms. (Xiangyu ,
2023) argue that this narrow focus can lead to an over-reliance on monetary incentives, which
may not always be effective in aligning interests.

According (Moloi & Marwala , 2021) agency theory has also been criticized for its static nature.
The theory assumes that principal-agent relationships are stable and predictable, but in reality,
these relationships are dynamic and evolve over time

Relevance of the theory to the study

Agency theory is highly relevant to the study as it provides a framework for understanding
how internal controls can mitigate conflicts of interest and align the goals of principals (owners
or shareholders) and agents (managers or employees) within an organization (Nina, 2023).
Another key contribution of agency theory to the study is its emphasis on monitoring and control
mechanisms. Internal controls such as audits, performance evaluation and governance structures
serve as a tool for reducing agency costs and ensuring that managers act in the best interest of the
organization.

(Xiangyu , 2023) states that effective monitoring mechanisms, such as independent boards and
performance audits, can reduce managerial opportunism and improve organizational
performance. Agency theory is relevant since it focuses on incentive alignment. The theory
suggests that aligning the interests of agents with those of principals can reduce agency problems
and enhance operational performance. (Moloi & Marwala , 2021) highlights that performance-
based incentives, such as bonuses and stock options, encourage managers to prioritize
organizational goals. By aligning incentives with organizational objectives, the company can
motivate employees to contribute to operational efficiency and effectiveness.

2.5 Types of internal controls

2.5.1 Preventive Controls
As explained by (Lartey, et al., 2023), preventative controls are measures implemented to deter
or prevent undesirable events, such as errors and fraud, before they occur. These controls include
processes such as segregation of tasks and authorization standards, which try to build a system
that reduces the risk of fraudulent activity by ensuring that no single individual has complete
control over a financial transaction. The COSO underlines that these controls not only serve to
avoid fraud, but they also improve the organization's entire risk management strategy.

2.5.2 Detective Controls

According to (Lartey, et al., 2023) detective controls identify and uncover errors or irregularities
after they have occurred. These controls include actions like reconciliations, audits, and
continuous monitoring, which are intended to detect anomalies in financial reporting and
operational procedures, hence increasing organizational accountability. (Younas & Veerasamy,
2024) emphasize regular reconciliations, such as comparing financial records to bank statements,
can identify differences early on, preventing larger concerns from arising.

2.5.3 Corrective Controls

(Younas & Veerasamy, 2024) define corrective controls as procedures and actions taken to rectify
identified errors or irregularities, ensuring compliance and restoring integrity. These controls
include systematic error repair processes and punitive consequences for violators, which fosters
an accountability and continuous improvement culture inside the organization. (Lartey, et al.,
2023) these procedures not only facilitate error correction but also provide a framework for
learning from mistakes, thereby enhancing the organization's resilience.

2.6 Conceptual Framework

Fig 2 Conceptual framework

2.7 Empirical Studies

2.7.1 The current internal control systems

Internal controls are essential in ensuring the proper management, reliability, and sustainability
of a business. They foster stakeholder confidence in the organization's operations, financial
reporting, and compliance with applicable laws and regulations (Odek, 2020).The internal
controls employed by wholesalers are designed to serve several key purposes that directly
influence the performance and stability of their operations.

Safeguarding assets: One of the primary objectives of internal controls is to protect the
organization’s assets from loss, theft, misuse, or damage. These controls apply to both tangible
assets such as cash, inventory, and equipment and intangible assets including trade secrets and
confidential information (Beasley, 2022).
Ensuring the accuracy and reliability of financial records: Internal controls help to guarantee that
financial information is accurate, complete, and reliable. This involves the use of reconciliations,
audit trails, segregation of duties, and authorization procedures to detect and prevent errors or
fraud in financial reporting (Mottoh & Sutrisno, 2023).

Promoting operational efficiency and effectiveness: Internal controls also contribute to

improving the efficiency and effectiveness of business operations. They include well-defined
procedures, policies and approval processes that streamline workflows, reduce waste, minimize
delays and enhance productivity across departments (Beasley, 2022).

Risk management: Internal controls serve as a critical tool for identifying and managing various
risks that could hinder business objectives. These may include operational risks, financial risks,
and compliance risks (Mottoh & Sutrisno, 2023).

Promoting ethical behavior and accountability: Internal controls support a culture of ethical
conduct and responsibility within the organization. This involves setting standards of behavior,
encouraging compliance with codes of ethics, and providing mechanisms for whistleblowing and
addressing misconduct (Mottoh & Sutrisno, 2023).

2.7.2 The relationship between internal controls and operational performance

There is an extremely close relationship between organizational performance and internal control
systems since sound internal controls contribute directly towards organizational effectiveness,
reducing operational risks and improving overall performance. (Mwanji, 2023) affirm that
operational performance is significantly enhanced by internal controls like risk management
controls, segregation of duties, and regular audits in an attempt to remove operational
inefficiencies and errors. Their study highlighted that companies with well-established internal
controls have more efficient operating processes and greater productivity. This is consistent with
(Okafor & Ogundeji, 2022), who confirmed that efficient internal control systems in Nigerian
manufacturing firms improved operating efficiency considerably by reducing errors and
enhancing decision making.

Additionally, (Kibet & Otieno, 2022) discovered that internal controls significantly affect the
operational and financial effectiveness of Kenyan wholesale companies. According to their
research, efficient internal controls enhanced performance by streamlining processes, cutting
down on waste and encouraging better resource allocation. These results highlight the fact that
internal controls are strategic assets that have a direct impact on an organization's operational
effectiveness in addition to being regulatory tools.

Inefficient internal controls in both public and private sector businesses have resulted in a
number of operational inefficiencies and financial mismanagement in Zimbabwe (Chiwara,
2021). The repercussions of inadequate internal control mechanisms are particularly evident in
instances of fraud and corruption in local government, like the Chitungwiza Municipality
incident. According to Chinyani, enhancing internal controls in Zimbabwean local governments
might greatly enhance operational effectiveness, accountability and transparency.

(Johnson & Lee, 2022) further support the crucial role internal controls play in increasing
operational efficiency by arguing that the application of corporate governance mechanisms, such
as efficient internal controls, improves financial reporting quality and accountability. Internal
controls lower the possibility of financial malfeasance and improve the effectiveness of decision-
making by guaranteeing appropriate task separation and routine monitoring.

2.7.3 Challenges in implementing internal controls

(Mugo, 2021) conducted a study on small and medium enterprises (SMEs), which sought to
evaluate the effectiveness and limitations of internal control systems. The study found that many
businesses lacked adequate knowledge and expertise in designing and implementing internal
controls. One of the key challenges identified was inadequate staff training, which made it
difficult for employees to understand and adhere to control procedures. Additionally, the study
highlighted that insufficient technological infrastructure hampered the automation and efficiency
of internal control processes (Mugo, 2021).

(Tetteh & Asare, 2022) carried out a study on the Ghanaian wholesale and observed that resource
limitations, poor internal audit structures and the absence of risk assessment practices were major
challenges affecting internal controls. Their study also found that many organizations had
internal control policies in place but these were poorly enforced due to lack of management
support and weak governance systems. This reflects a common challenge in many developing
economies where internal controls are treated as a formality rather than a strategic tool.
A study by (Kinyu, 2022) examined how internal controls challenges affect organizational
performance. the study revealed that lack of segregation of duties as a major contributor to
operational inefficiencies. Additionally, outdated controls systems and poor interdepartmental
communication were found to undermine the effectiveness of internal control procedures (Kinyu,
2022). The authors emphasized that proper segregation of financial roles such as cash handling,
banking reconciliation and approval functions as keys to preventing manipulation and enhancing
operational efficiency

(Chivasa, 2023) focused on Zimbabwean local authorities and revealed that corruption, political
interference, poor monitoring mechanisms, and lack of transparency were among the most
pressing challenges to internal control implementation. His study noted that while internal
control policies existed in many organizations, implementation was weak due to ineffective
enforcement and poor leadership accountability.

2.7.4 Strategies to enhance operational performance through effective internal controls

Demeter conducted a study on operational performance improvement strategies in wholesale and
retail businesses, the study sought to explore various strategies that wholesalers and retailers can
adopt to enhance their operational efficiency and improve overall business performance
(Demeter, 2023). The researchers focused on key areas such as inventory management practices,
staff training, internal process streamlining, and the role of technology in driving efficiency. The
findings revealed that effective inventory control, investment in employee skills development,
and the adoption of digital systems such as Enterprise Resource Planning (ERP) significantly
contributed to enhanced operational performance (Demeter, 2023).

(Musyoka, 2023) carried a study about the effects of Operational Strategies on Organizational
Performance of Wholesale and Retail Chains highlighted the impact of lean management
practices, quality control systems, and customer service strategies. Their quantitative study
concluded that wholesalers who implement structured quality management systems and
continuous improvement initiatives experience higher productivity and customer satisfaction
(Musyoka, 2023).

Furthermore, (Makota , et al., 2023) conducted a study in Zimbabwe that assessed the impact of
Enterprise Resource Planning (ERP) systems on organizational controls in order to assess the
function of technology in internal control systems. The study found that by facilitating real-time
monitoring, increasing transactional correctness, and facilitating improved managerial decision-
making, ERP systems improve the efficacy of internal controls. Because ERP integration
promotes increased operational efficiency and accountability, these findings are especially
pertinent to wholesalers that deal with big inventory.

2.8 Research Gap

Studies shows that internal controls lead to better performance, they frequently treat internal
control systems as a single, cohesive system without considering the ways in which each element
such as risk assessment, control environment, and monitoring contributes to operational results
on its own. (Otoo, et al., 2023) discovered that monitoring and information and communication
components do not significantly affect organizational effectiveness, but control environment and
risk assessment do. Similar findings were made by (Nguyen & Tuan, 2022), who noted that
different internal control elements have differing degrees of impact on organizational
performance, indicating the need for a more thorough investigation.

Furthermore, methodological variations, such as research design, sector focus, sample size, and
analytical techniques, may be significant variables, as evidenced by discrepancies in earlier
findings, some of which showed strong associations and others that showed weak or no links
(Otoo, et al., 2023). Notably, there aren't many empirical studies in Zimbabwe that critically
evaluate the practical effects of internal controls on operational performance, especially in the
wholesale sector. This study fills that gap by breaking down internal control components and
examining how they specifically affect Metro Hypermarket’s performance using a case study
methodology based on the regional economy.

2.9 Summary
The chapter covered theoretical frameworks this included the COSO framework explain
information and communication, monitoring activities, control activities, risk assessment, and
control environment. The chapter also discussed about agency theory and contingency theory
highlighting the justification for internal controls and their function in balancing interest with an
organization. An empirical study from both local and international emphasis on retail and
wholesale industries was analyze to demonstrate the role internal controls have in organizational
success, followed by a research gap. The next chapter will focus on research methodology.
 CHAPTER III
RESEARCH METHODOLOGY

3.0 Introduction
Methodology refers to the systematic analysis of the methods used in research, encompassing the
rationale and procedures for data collection and analysis (Johnson, 2023). This chapter presents
the methodology of this study, focusing on the descriptive research design that will guide the
exploration of internal controls at Metro Hypermarket Wholesalers. It outlines the data collection
and analytical techniques employed, ensuring a comprehensive approach to answering the
research questions effectively.

3.1 Research Design

Research design is the framework that guides the collection, measurement, and analysis of data
to address a specific research problem effectively. According to (Smith, 2024), it provides a
structured approach to ensure that the evidence gathered is relevant and sufficient for answering
research questions. The researcher will adopt a descriptive research design, which enables to
provide a detailed account of the characteristics of a population or phenomenon without
manipulating variables. This approach is valuable for identifying patterns and trends, offering
essential insights into the research topic.

3.1.1 Descriptive Research Design

Descriptive research design is a method used to systematically observe and describe the
characteristics of a population or phenomenon without manipulating variables. According to
(Sirisilla, 2023), this design focuses on providing a detailed account of the subject being studied,
allowing researchers to identify patterns, trends, and relationships within the data. It is chosen for
its ability to offer a comprehensive understanding of a specific issue, making it particularly
useful in fields such as market research, social sciences, and health studies. By employing
descriptive research, researchers can gather valuable insights that inform future studies and
decision-making processes without inferring cause-and-effect relations.
3.2 Research Approach
The researcher, adopted a mixed research method, specifically utilizing an explanatory
sequential design. This approach combines both quantitative and qualitative research methods,
allowing for a more comprehensive understanding of the research problem. Mixed research
method integrates quantitative and qualitative techniques to provide a fuller perspective on a
research question, enabling validation and enrichment of findings through data triangulation
(Creswell & Plano Clark, 2021). The Explanatory Sequential Method starts with quantitative
data collection and analysis, followed by qualitative data to explain or build upon these initial
results, clarifying complex phenomena (Ivankova, et al., 2020).

The merits of mixed methods are significant, they offer a comprehensive understanding by
capturing both statistical trends and individual experiences (Fetters, et al., 2020). Additionally,
the cross-validation of different data types enhances credibility and reliability (Tashakkori &
Teddlie, 2020). Mixed methods research: Foundations and agenda. Sage. Mixed methods also
provide flexibility, allowing researchers to adapt emerging insights (Creswell & Plano Clark,
2021) and add depth to findings, offering context that numbers alone cannot convey (Bazeley,
2021).

This mixed methods approach is particularly relevant for the study on internal controls at Metro
Hypermarket Wholesalers. The quantitative phase will gather broad data on internal control
effectiveness, while the qualitative phase will explore the reasons behind these findings through
stakeholder interviews. This dual approach enhances the robustness of the research and ensures
diverse participant voices are considered, leading to actionable insights for improving
operational performance. By employing this methodology, the researcher aims to provide a
comprehensive analysis that addresses both statistical significance and the contextual factors
influencing internal controls in the organization.

3.3.1 Research Population

A research population refers to the entire group of individuals that meet specific criteria for a
study, serving as the foundation for drawing meaningful insights (Frontline Workforce Pulse
Report, 2024). In the study on the impact of internal controls at Metro Hypermarket Wholesalers,
the researcher included diverse participants: internal auditors, management staff, frontline
employees (like cashiers and stock clerks), and IT personnel. This varied representation ensures
a comprehensive understanding of how internal controls influence operational performance,
highlighting the importance of multiple perspectives in organizational research. The study
specifically focused on the Metro Hypermarket head office in Msasa, Harare, where strategic
decisions are made.

3.3.2 Sampling Strategy and Sample Size

This study employed a non-probability sampling strategy, utilizing purposive sampling for the
qualitative component and aiming for a comprehensive inclusion of a specific, defined group for
the quantitative component within the selected research site. The research focused on the Metro
Hypermarket head office in Msasa, Harare, as the case study.

The target population for this study, as defined in section 3.3.1, comprised individuals directly
involved with or impacted by internal control systems at the Metro Hypermarket head office.
This included top management, internal auditors, frontline employees (such as cashiers and stock
clerks), and IT personnel. The total number of potential participants identified within these roles
at the head office was 22 individuals.

 Quantitative Data (Questionnaires): Given the manageable size of the identified target
population (22 individuals) at the head office, the study aimed to include all these
individuals in the quantitative data collection phase using questionnaires. This approach
sought to gather a comprehensive set of perceptions from this specific group. The actual
number of respondents who participated would then constitute the achieved sample for
the questionnaire survey. This method was chosen to ensure that diverse perspectives
from various roles directly involved with the implementation and monitoring of internal
controls were captured from this specific location.
 Qualitative Data (Interviews): For the qualitative component, purposive sampling was
employed. This technique involves selecting participants based on their specific
knowledge, role, or experience relevant to the research questions. Key informants from
top management, internal audit, and frontline employees were selected who were deemed
to have in-depth insights into the internal controls, their implementation, challenges, and
impact on operational performance at Metro Hypermarket. The goal was to obtain rich,
detailed information to complement the quantitative findings. The number of
 interviewees was determined by the aim of achieving informational richness and covering
diverse perspectives from the key stakeholder groups.

The distribution of the target population and the intended participants for interviews is detailed in
Table 3.1. The study's delimitations specified collecting data from employees in the audit
department, frontline employees, IT personnel, and top managers, as these groups are directly
involved in implementing and monitoring internal controls.

Table 3.1: Target Population and Sample Distribution at Metro Hypermarket Head Office

Population Target Targeted for Planned Questionnaires

Identity Population Questionnaire Interviews Distributed
Top 6 6 2 6
Management
Internal 6 6 2 6
Auditors
Frontline 6 6 3 6
employees
IT Personnel 4 4 - 4
Total 22 22 7 22

[Source: Researcher's compilation based on Metro Hypermarket data (2024)

3.4. Sources of Data

Data is a crucial element in research, providing the foundation for analysis and conclusions. It
can be categorized into two main types: primary data and secondary data.

3.4.1 Primary Data

Primary data refers to information collected firsthand by the researcher for a specific research
purpose. This type of data is gathered through methods such as surveys, interviews, experiments,
and observations. In the study, the researcher utilized personal interviews and questionnaires to
gather insights directly from participants. The primary data collected is tailored to the specific
needs of the study, ensuring its relevance and accuracy (Creswell, 2021).
Advantages of Primary Data

Specificity: Directly related to the research question, making it highly relevant.

Control: Researchers have control over the data collection process, enhancing reliability.

Timeliness: Reflects the latest trends or opinions, essential for dynamic fields (Smith, 2024).

Disadvantages of Primary Data

Cost: Collecting primary data can be expensive due to the resources required for surveys or
interviews.

Time-Consuming: Gathering and analyzing primary data often takes significant time.

Potential for Bias: The researcher's influence during data collection can introduce bias (Johnson,
2023).

3.5 Research instruments

3.5.1 Interviews
the researcher conducted face-to-face personal interviews as part of my research at Metro
Hypermarket Wholesalers head office branch in Harare. These interviews utilized open-ended
questions, allowing participants to express their thoughts and experiences in depth. This
qualitative approach fosters a richer understanding of respondents' perspectives, as it encourages
them to elaborate on their answers and share insights that structured questionnaires might miss
(Smith, 2024). The direct interaction also helps build rapport, often leading to more candid
responses, which is invaluable for qualitative research. By employing personal interviews, the
researcher aimed to gather comprehensive data that captures the nuances of participants' views
on internal controls.

3.5.2 Questionnaire
A questionnaire is a structured tool for collecting data, consisting of a series of questions aimed
at gathering specific information (Smith, 2023). In the research on the impact of internal
controls at Metro Hypermarket Wholesalers, the researcher used a questionnaire to obtain
perceptions related to internal control measures.
To facilitate analysis, the researcher employed closed-ended questions with a Likert scale, which
offers five response options: Strongly Disagree, Disagree, Neutral, Agree, and Strongly Agree.
This format simplifies data analysis and provides insights into the intensity of respondents'
feelings about specific statements (Kusmaryono & Wijayanti, 2022).

Utilizing a Likert scale has several advantages. It captures varying degrees of opinion, enhances
data reliability, and allows for easier statistical analysis, helping to identify trends within the data
(Smith, 2023). Overall, the structured questionnaire effectively gathered valuable data on internal
controls. The Likert scale table is shown below.

Table 3.2 Likert Scale

Attitude Strongly Agree Neutral Disagree Strongly

Agree Disagree

Points 5 4 3 2 1

The drop-and-pick model involves distributing research questionnaires to participants and then
collecting them after a set period. In my study, the questionnaires were distributed on 23 April
and collected on April 30. This one-week interval was chosen to provide respondents ample time
to complete the questionnaires thoughtfully, considering that a longer response time can enhance
the quality of the data collected (Dillman, 2024). Allowing sufficient time also accommodates
participants’ varied schedules, which can lead to higher response rates and more reliable data
(Fowler, 2022). Thus, the drop-and-pick model effectively balances the need for timely data
collection with the necessity of allowing respondents to engage meaningfully with the
questionnaire.

3.6 Reliability and Validity of findings

3.6.1 Reliability testing
Reliability refers to the consistency and dependability of a measurement tool, indicating the
extent to which it produces stable and consistent results over time. In research, a reliable
instrument yields similar outcomes when repeated under the same conditions, which is crucial
for ensuring the credibility of the findings (Johnson, 2023). Reliability is a measure of the
accuracy of a test or assessment, reflecting how well it can be trusted to produce consistent
results across different instances.

To assess reliability in my study on the impact of internal controls in enhancing operational

performance at Metro Hypermarket Wholesalers, the researcher employed Cronbach's Alpha, a
widely recognized statistical tool used to measure the internal consistency of a set of items
within a survey or questionnaire. Cronbach’s Alpha values range from 0 to 1, with higher values
indicating greater reliability. A commonly accepted threshold for acceptable reliability is 0.70;
however, values above 0.80 are considered good, while values above 0.90 indicate excellent
reliability (Beasley, 2022) (Tavakol & Dennick, 2022).

The researcher calculated Cronbach's Alpha for the internal control measurement items after
collecting data from respondents. The analysis yielded an Alpha coefficient of 0.85, which
signifies good reliability. This result indicates that the items within the questionnaire consistently
measure the construct of internal controls, thereby enhancing the confidence in the data
collected.

By utilizing Cronbach's Alpha, the researcher ensured that the measurement tool was reliable,
which in turn bolstered the validity of the study's overall findings. Reliable instruments are
essential for drawing robust conclusions and making informed decisions based on the data
obtained.

3.6.2 Validity
Validity refers to the extent to which a measurement tool accurately captures what it intends to
measure (Smith, 2021). In the context of my study on the impact of internal controls in
enhancing operational performance at Metro Hypermarket Wholesalers, validity is crucial for
ensuring that the results reflect the true relationship between internal controls and operational
efficiency. A valid measurement allows researchers and practitioners to make informed decisions
based on reliable data.

In this study, the researcher focused on criterion-related validity to evaluate how effectively
internal control measures predict operational performance outcomes. Internal controls are
essential mechanisms that organizations implement to ensure the integrity of financial reporting,
compliance with laws and regulations, and the safeguarding of assets (Johnson & Lee, 2022). By
establishing a robust framework of internal controls, businesses can minimize risks, prevent
fraud, and enhance decision-making processes.

To measure the effectiveness of internal controls at Metro Hypermarket, the researcher collected
data from various departments, utilizing established performance indicators such as inventory
turnover rates, order accuracy, and customer satisfaction scores. By comparing these indicators
with the presence and strength of internal control measures, the researcher aimed to ascertain the
correlation between effective controls and operational success.

One critical assumption of criterion-related validity is that the performance metrics used as
criteria must themselves be valid and reliable. In this case, the operational performance
indicators were chosen based on their established relevance and applicability within the retail
sector, ensuring that they accurately reflect the effectiveness of internal controls. Additionally,
the sample of departments analyzed was representative of the entire organization, allowing for
generalizable insights into the relationship between internal controls and performance.

The results of the study revealed a significant positive correlation between strong internal control
systems and enhanced operational performance at Metro Hypermarket. Departments with well-
implemented controls demonstrated higher efficiency, fewer errors in order processing, and
improved customer satisfaction. This finding aligns with the assertions of (Johnson & Lee,
2022), who emphasize that effective internal controls are critical for operational excellence,
particularly in complex retail environments.

3.7 Ethical Considerations

Ethical considerations are the guiding principles that shape the research practices, ensuring that
the researcher respect the rights, dignity, and welfare of all participants involved. They play a
crucial role in maintaining trust and integrity in the research process. In 2024, the researcher
recognizes the growing importance of ethical practices, especially as new technologies and
methodologies continue to evolve (National Institutes of Health, 2024).

Informed Consent: The researcher prioritized obtaining informed consent from all participants.
This means thoroughly explaining the study's purpose, procedures, risks, and benefits so that
individuals can make educated decisions about their involvement. Respecting their autonomy is
essential.
Confidentiality: Protecting the privacy of my participants is paramount. The researcher took
measures to safeguard personal information, ensuring that any data collected is anonymized or
aggregated to prevent identification. This approach helps minimize potential harm and builds
trust.

Integrity: the researcher committed to conducting my research with honesty and transparency.
This includes avoiding any form of fabrication, falsification, or plagiarism. Upholding integrity
not only enhances the credibility of the work but also fosters trust within the broader research
community.

Cultural Sensitivity: The researcher approached my research with an awareness of cultural

differences and the diverse backgrounds of participants. By being culturally sensitive, the
ensured that my methods and interpretations were respectful and relevant, which fostered
inclusivity and minimized the risk of misrepresentation.

Transparency in Research Funding: In the academic research study, the researcher

emphasized the importance of transparency regarding funding sources to uphold ethical
standards. The researcher understood that openly disclosing where funding came from was
essential for mitigating potential biases and conflicts of interest. By clearly communicating these
sources to participants and stakeholders, this aimed to build trust and credibility in the findings.
This practice not only reassured participants about the integrity of the research but also fostered a
culture of accountability within the scientific community, allowing others to critically assess the
influence of financial support on research outcomes. Ultimately, this commitment to
transparency reinforced the ethical foundation of the work.

3.8. Data Analysis

Data analysis is a critical process that transforms raw data into meaningful insights, enabling
informed decision-making across various fields. Utilizing mixed research methods, which
integrate both qualitative and quantitative approaches, enhances the depth and breadth of
understanding. This methodology allows researchers to leverage statistical analysis for pattern
recognition while simultaneously capturing the rich context behind the numbers through
interviews, focus groups, or open-ended surveys. By combining these approaches, data analysis
not only identifies trends and correlations but also elucidates the underlying narratives, leading to
a comprehensive exploration of the research questions at hand. This multifaceted perspective is
essential for developing robust conclusions that can inform practice and policy effectively.

3.8.1 Quantitative Data Analysis

The quantitative analysis utilized multiple regression modeling to examine how internal control
mechanisms predict operational performance at Metro Hypermarket. The model assessed the
impact of variables such as control compliance, audit frequency, and staff training on operational
efficiency metrics. Correlation analysis initially identified significant relationships between these
variables, but regression provided deeper insights by isolating the unique influence of each
predictor. For instance, audit frequency emerged as a stronger predictor than staff training,
highlighting targeted areas for operational improvement. This dual approach allowed for a
comprehensive understanding of how internal controls drive performance, offering actionable
insights for management.

3.8.2 Qualitative Data Analysis

Qualitative analysis in this study utilized thematic analysis, a systematic method for interpreting
complex qualitative data. This approach involved identifying and refining themes from interview
transcripts, following established frameworks like Braun and Clarke (2024). Existing studies,
have highlighted the effectiveness of thematic analysis in qualitative research for uncovering
nuanced insights. By applying this method, the study was able to derive rich thematic insights
from interview data, which were then integrated with quantitative findings to provide a
comprehensive understanding of the research topic. This integration allowed for a richer
interpretation of how internal controls influence operational performance, aligning with
contemporary qualitative research practices.

3.9 Data Presentation

The data presentation aimed for clarity and accessibility, combining visual and narrative
techniques to communicate findings effectively. Quantitative results from questionnaire surveys,
processed using SPSS Version 25, were presented in tables, bar graphs, and pie charts to
highlight trends like employee adherence to control protocols and cost-saving patterns.
Qualitative insights from interviews were paraphrased into thematic excerpts, preserving
participants' intent while avoiding direct quotes. This mixed-methods approach allowed the study
to juxtapose statistical outcomes with contextual insights, balancing empirical rigor with
interpretative depth. By merging SPSS-generated visuals with annotated qualitative extracts, the
presentation ensured findings aligned with research objectives in a clear and engaging manner.

3.10 Chapter Summary

The research methodology for investigating the impact of internal controls on Metro
Hypermarket Wholesalers' operational performance was structured around a descriptive design,
which systematically analyzed the relationship between control mechanisms and operational
outcomes. A mixed-methods approach was employed, combining quantitative data collection on
measurable metrics with qualitative insights from interviews to contextualize findings. Data was
gathered through primary sources like questionnaires and interviews, supplemented by secondary
data from internal reports and industry benchmarks. The reliability and validity of findings were
ensured through statistical testing and expert review. Ethical considerations were addressed by
maintaining participant confidentiality and obtaining informed consent. Data analysis involved
statistical modeling for quantitative data and thematic coding for qualitative data, with results
presented in a clear and visual format. Overall, this methodology provided a robust framework
for evaluating how internal controls influenced operational performance at Metro Hypermarket
Wholesaler.