Title: Economic effects of growth strategies on the performance of quoted manufacturing firms in Nigeria

Authors: Samson Ige Abolarinwa; Cosmas Ikechukwu Asogwa; Charity A. Ezenwakwelu

Addresses: Department of Management, University of Nigeria, Nigeria ' Department of Accountancy, Renaissance University, Enugu, Nigeria ' Department of Management, University of Nigeria, Nsukka, Nigeria

Abstract: We used a sample of 144 firm-years of quoted manufacturing Nigerian firms to examine the effect of growth strategies on firms' performance for the period between 2014 and 2017. We found that internal growth strategies - such as aggressive profit retention - and new product development improved manufacturing firms' economic performance. Internal growth strategies yielded positive economic effects on returns on assets and equity. Growth through market deepening yielded high market shares that created economic values for investors. However, external growth strategies negatively affected firms' returns on assets, though conglomeration strategies enhanced equity investors' stakes. The positive effect associated with internal growth strategies depends on good management efficiency in terms of asset utilisation and good liquidity management. The effect suggests that growth strategies should be pursued when firms experience an increasing return to scale. Otherwise, inefficiency in assets utilisation cancels out any potential positive economic effects of a growth strategy.

Keywords: growth strategies; growth; economic effect; performance; manufacturing firms; internal growth; external growth; performance management; international journal; Nigeria; strategies.

DOI: 10.1504/IJBPM.2020.108325

International Journal of Business Performance Management, 2020 Vol.21 No.3, pp.363 - 383

Received: 26 Apr 2019
Accepted: 08 Nov 2019
Published online: 08 Jul 2020 *

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