Effect of Internationalisation on Financial Performance of Listed Manufacturing Companies in Nigeria

Abstract

Business internationalisation has created distinctive characteristics in the manufacturing industry, one of which is the removal of trade barriers among nations to facilitate market expansion and improve healthy competitions among business organizations. This study sought to establish the effect of business internationalisation on financial performance of listed manufacturing companies in Nigeria. Specifically, the study sought to determine the effect of foreign trade, foreign direct investments, international proprietary rights and business foreign funding on financial performance of listed manufacturing companies in Nigeria. Correlational survey research was utilized in this study. The study’s target population is 74 seventy-four listed manufacturing companies from which 70 representing about 95% of the total targeted population were included in the analysis. The secondary data was collected from the company’s financial reports in order to inquire about business internationalisation and financial performance of listed manufacturing companies. Descriptive and inferential statistics were used to analyse the data in this research. Specifically, descriptive statistics related to means, minimum, maximum and standard deviation. The study used multiple linear regression models to show the effect of internationalisation of business on financial performance of the listed Nigerian manufacturing companies. The study results for both primary and secondary data revealed that foreign trade, foreign direct investment and business foreign funding have a significant effect with financial performance measured by ROA of listed manufacturing companies in Nigeria. The effect of international proprietary rights on financial performance was found to be positive but insignificant using primary data but they findings were significant using secondary data. Based on the finding of the study, the study concludes that foreign trade is important in manufacturing sector. Listed manufacturing companies that engage strategically in foreign trade through exportation and exploration of foreign markets have a high probability being successful in terms of financial performance compared to companies that refrain from engaging in foreign trade. The study concluded that companies that invest outside their origin countries enjoy increased profits margins and high returns on assets through their foreign operations. The study therefore concluded that international proprietary rights do not influence in any way the financial performance of the companies that have internationalized their operations. The study concluded that listed manufacturing companies that are struggling to finance their operations must seek international partners to partner with. The study recommended that efforts should be made by the management of the listed manufacturing companies to make the sector more attractive to entice more foreign direct investment, engage in foreign trade and seek for foreign funding into the listed manufacturing companies in Nigeria for improved financial performance.