Corporate growth strategies and financial performance of quoted manufacturing firms in Nigeria: the mediating role of global economic crises

• Published in: Cogent economics & finance Vol. 8; no. 1; pp. 1 - 18
• Main Authors: Abolarinwa, Samson Ige, Asogwa, Cosmas Ikechukwu, Ezenwakwelu, Charity A, Court, Timinepere O, Adedoyin, Samuel
• Format: Journal Article
• Language: English
• Published: Abingdon Taylor & Francis 2020; Cogent; Taylor & Francis Ltd; Taylor & Francis Group
• Subjects: Assets; Companies; Corporate growth; Crises; Development strategies; Economic conditions; Equity; external growth; Financial performance; global economic crises; Global economy; Growth strategies; internal growth; Manufacturing; manufacturing firms; mediating role; Mergers; Value; Nigeria
• ISSN: 2332-2039; 2332-2039
• DOI: 10.1080/23322039.2020.1750259

This study examines the mediating role of global economic crises (GECs) in the effect of growth strategies on Nigerian manufacturing firms' performance. The study used secondary data for the period between 2000 and 2017 in its analysis. Therefore, an expost facto research design was used in the analysis of 120 firms listed on the Nigerian Stock Exchange, which were selected out of 190 listed firms using a judgmental sampling technique. The researchers follow data cluster analysis approach to analyze the data for the time around a GEC, including pre-and post-crisis periods. The analysis reveals positive and statistically significant effects of internal growth strategies on return on assets and return on equity (coefficient = 9.474 and 6.277; P < 0.01). However, the researchers found that external growth strategies negatively and significantly affect the return on assets (coefficient = −6.005; p-value<0.01) while the effect is positively significant on return on equity. Regarding GECs, the study found a statistically significant reverse effect. It was found that GECs together with external growth strategies yield a positive and significant effect on return on assets, while their mediation with internal growth strategies had a negative and significant effect on return on assets and return on equity (coefficients = −1.480; −2.041, p-value<0.05; coefficient = 2.194, p-value<0.05; 0.608, p-value <0.05). Thus, it is recommended that during GECs, firms should focus on external growth strategies, including mergers and acquisitions, while internal growth strategies, such as product and market developments, should be pursued under progressive and normal economic conditions.