Vol. 1, No. 2 ISSN 2705-358X June, 2019

Vol. 1, No. 2 ISSN 2705-358X June, 2019

@Faculty of Management and Social Sciences Hallmark University, Ijebu-Itele, Ogun State, Nigeria

Copyright 2019

All rights reserved No part of this publication may be reproduced, stored in retrieval system or transmitted in any

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prior written permission of the publisher.

Published June 2019

By:

Faculty of Management and Social Sciences Hallmark University, Ijebu-Itele,

Ogun State, Nigeria.

Disclaimer

The responsibility of the content and opinions expressed in Hallmark University Journal of

Management and Social Sciences is exclusively of the author(s) concerned. The publisher of the journal is not responsible for errors in the contents or any consequences from the use of

information contained in it. The opinions expressed in the research papers in this journal do not necessarily represent the views of the publisher.

Hallmark University Journal of Management and Social Sciences (HUJMSS)

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Editorial Board

Eze, Benneth Uchenna, PhD, FME, FEB, FIIAS - Editor-in-Chief Adebayo, A. PhD - Managing Editor

Miss Faith Ohwofasa - Journal Secretary

1. Prof. A. A. Sulaimon (Department of Business Administration, University of Lagos, Akoka)

2. Prof. T. O. Akinbobola (Department of Economics, Obafemi Awolowo University, Ile-Ife) 3. Prof. O. O. Aregbeyen (Department of Economics, University of Ibadan, Ibadan)

4. Prof. O. J. Oyeniyi (Department of Marketing, Lagos State University, Ojo) 5. Prof. Seth Akutson (Department of Economics, Kaduna State University, Kaduna)

6. Prof. A. R. Bankole (Department of Industrial Relations and Human Resource Management, Lagos State University, Ojo)

7. Prof. J. O. Olujide (Department of Business Administration, University of Ilorin, Ilorin) 8. Prof. Ranti Uwuigbe (Department of Accounting, Covenant University, Ota)

9. Dr M. S. Oladimeji (Department of Business Administration, Olabisi Onabanjo University, Ago-

Iwoye) 10. Dr A. T. Onanuga (Department of Economics, Olabisi Onabanjo University, Ago-Iwoye)

11. Dr F. Ajayi (Department of Economics, Olabisi Onabanjo University, Ago-Iwoye) 12. Dr A. A. Adeyemi (Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye)

13. Dr O. T. Akinola (Department of Business Administration, Hallmark University, Ijebu-Itele) 14. Dr S. S. Abere (Department of Economics, Hallmark University, Ijebu-Itele)


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A NOTE FROM THE EDITOR-IN-CHIEF

Hallmark University Journal of Management and Social Sciences (Vol. 1, No. 2, June 2019)

consists of research papers that cut across several domains of knowledge in management and

social sciences. The journal seeks to provide a credible outlet for the dissemination of research

findings, towards the expansion of the frontiers of knowledge. The journal boasts global reach,

as its contents will be accessible from around the world via the Hallmark University sub-domain:

www.hujmss.hallmark.edu.ng. This current edition has both online and offline versions so as to

enhance easy open access that expands the visibility of our authors. The Editorial Board

expresses our profound gratitude to all our reviewers across the globe as well as our

contributors.

Eze B. U., PhD, FME, FEB, FIIAS

Editor-in Chief

http://www.hujmss.hallmark.edu.ng/


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CALL FOR PAPERS

Hallmark University Journal of Management and Social Sciences (HUJMSS) is published thrice a year - February, June and October. Scholars in management and social sciences as well as

related fields all over the world are invited to send in their contributions. The journal welcomes

submission of manuscripts that can withstand rigrous review. Papers submitted will be published approximately two months after acceptance. Interested contributors should type their scientific

papers on A4 size with wide margins and 1.5 line spacing. It should not exceed 15 pages including the abstract of not more than 250 words. A maximum of five key words should be

provided. This journal employs double-blind review process, which means that the reviewers’ identities are concealed from the authors, and vice versa and all submitted manuscripts are

assessed by two reviewers. HUJMSS equally uses plagiarism software (Turnitin) to check

similarity index, which should not exceed 20%.

The paper should be empirical or theoretical, well researched, and relevant to the broad domain. Short communications, reviews, commentaries and methods could also be considered.

Contributors should include: Author’s name(s), institutional affiliation, title of paper, abstract, introduction, statement of problem, review of related literature, methodology, findings, discussion

of findings, conclusion and recommendations. Authors should include their phone numbers and

e-mails. Manuscripts must be in conformity with the latest American Psychological Association (APA) documentation style. Manuscripts should be submitted in Microsoft Office Word with Times

New Roman, 12 font size. This should be sent to: [email protected], copying

[email protected].

mailto:[email protected]



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TABLE OF CONTENTS Editorial Board ........................................................................................................................ ii

A NOTE FROM THE EDITOR-IN-CHIEF .................................................................................... iii

CALL FOR PAPERS ................................................................................................................. iv

LIST OF CONTRIBUTORS ....................................................................................................... vi

CONTINGENCY MANAGEMENT THEORY AND BUSINESS SURVIVAL IN A TURBULENT ENVIRONMENT: EVIDENCE FROM NIGERIAN BANKING SECTOR. Prof. Kuye, O. L.; ADEBISI, S. A. & BAKARE, N. A. ............................................................................................................ 1

EFFECT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA. WILLIAMS, O. D. & ABERE, S. S. ........................................................................................................ 13

ENVIRONMENTAL SCANNING AND CUSTOMER VALUES OF SELECTED COMMERCIAL BANKS:

FRAMEWORK OF BUSINESS PERFORMANCE. IKOTUN, Sabic Idowu; SHONUBI, Akeem Olalekan & EGWU, Bridget Uchenna ................................................................................... 25

INFLUENCE OF CELEBRITY ENDORSEMENT ON CONSUMER PATRONAGE OF SOFT DRINKS: A

STUDY OF PEPSI ‘LONG THROAT’ BOTTLE ADVERTISEMENT. ADEWALE, Ganiu Adegbite; HAMEED, Oyelaja Gbadamosi & Moshood, Muhammed ........................................................ 38

THE IMPACT OF teachers’ MOTIVATION AND REMUNERATION ON JOB PRODUCTIVITY AND PERFORMANCE OF ACCOUNTING EDUCATION STUDENTS. ADEYEMI, Adedayo Patrick; oyewole Adegboyega Sule & NWABUISI, Olanrewaju Florence ............................................ 49

COMPETITIVE INTELLIGENCE AND ITS APPLICATION IN SMALL AND MEDIUM ENTREPRISES

(SMEs) IN LAGOS METROPOLIS. OLADIMEJI, Maruf Sanjo; ADETUNMOBI, Lookman Olaseni & ODUNAYO, Henry Adewale ................................................................................................ 61

KNOWLEDGE MANAGEMENT AND MANUFACTURING FIRMS’ PERFORMANCE IN NIGERIA. ADELEKAN, Saidi Adedeji; ERIGBE, Patience Ajirioghene; OJO, Olanipekun James & TORIOLA, Anu Kehiro ........................................................................................................................ 69

CUSTOMER RELATIONSHIP MANAGEMENT AND ORGANISATIONAL PROFITABILITY IN NIGERIA BANKING INDUSTRY. OGUNKOYA, O. A ............................................................... 76

IMPACT OF BRANDING ON CONSUMER BEHAVIOR IN THE NIGERIAN MARKET CASE OF

CONSUMABLE GOODS. (NESTLÉ NIG PLC, LAGOS-STATE). AKINREMI, Babatunde Rasheed; CHUKS, Onwuluri & OMOARE, Emma O. ............................................................................ 85

AN EXPERIMENTAL EVALUATION OF THE EFFECT OF OPEN/CLOSED-BOOK EXAMINATIONS

AND FREE-RIDING BEHAVIOUR IN TAKE-HOME ASSIGNMENTS ON THE PERFORMANCE OF ACCOUNTING STUDENTS. ADEBAYO, A.; AKINOLA, T. O. & EZE, B. U ................................. 98

EFFECTS OF REMITTANCES ON CONSUMPTION IN NIGERIA. YUSSUFF, R. O. .................... 106

DEVELOPMENT AND CORRUPTION IN NIGERIA: AN INTER-RELATED CONCEPTUAL ISSUES. ADELAJA, Babatunde Joseph & GANIYU, Rasaq Omokeji ................................................... 118

ENTREPRENEURIAL MARKETING AND SMALL AND MEDIUM ENTERPRISE PERFORMANCE IN OGUN STATE. EKPUDU, J. E.; OYALAKUN, D. O.; BAKARE, T. O. & AKINYELE, T. S. ........... 122

CORPORATE IMAGE AND CUSTOMERS’ VALUE IN THE NIGERIAN TELECOMMUNICATION INDUSTRY. AGBI, Babatunde Daniel ................................................................................ 130


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LIST OF CONTRIBUTORS S/N NAMES INSTITUTION/ AFFILIATION

1 Abere, S. S. (PhD) Hallmark University, Ijebu-Itele, Ogun State

2 ADEBAYO, A. (PhD) Hallmark University, Ijebu-Itele, Ogun State

3 Adebisi S. A. (PhD) University of Lagos, Akoka, Lagos.

4 ADELAJA, Babatunde Joseph Hallmark University, Ijebu - Itele, Ogun State

5 ADELEKAN Saidi Adedeji, PhD Mountain Top University, Ogun State

6 ADEWALE, Ganiu Adegbite Ogun State Institute of Technology, Igbesa, Ogun State, Nigeria

7 ADEYEMI Adedayo Patrick (ACA) Michael Otedola College of Primary Education, Noforija Epe, Lagos State

8 AGBI Babatunde Daniel (Ph.D) Chrisland University, Abeokuta, Nigeria

9 AJETUNMOBI, Lookman Olaseni Olabisi Onabanjo University, Ago-Iwoye

10 AKINLEYE, Toye Samson Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria

11 AKINOLA, T.O. (PhD) Hallmark University, Ijebu-Itele, Ogun State

12 Akinremi Babatunde Rasheed Ogun State Institute of Technology, Igbesa, Ogun State.

13 Bakare, N. A. University of Lagos, Akoka, Lagos.

14 BAKARE, Taoheed Olutunde

Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria

15 Chuks Onwuluri

Ogun State Institute of Technology, Igbesa, Ogun State.

16 EGWU, Bridget Uchenna McPherson University, Seriki-Sotayo, Abeokuta, Ogun State, Nigeria.

17 EKPUDU, Jonathan Ehimen Federal University of Agriculture, Abeokuta, Ogun State, Nigeria

18 ERIGBE Patience Ajirioghene, PhD Mountain Top University, Ogun State

19 EZE, B.U. (PhD) Hallmark University, Ijebu-Itele, Ogun State

20 GANIYU, Rasaq Omokeji Fountain University, Osogbo, Osun State

21 HAMEED, Oyelaja Gbadamosi Ogun State Institute of Technology, Igbesa, Ogun State,Nigeria

22 IKOTUN, Sabic Idowu1 McPherson University, Seriki-Sotayo, Abeokuta, Ogun State, Nigeria.

23 MOSHOOD, Muhammed Crestal Consults, Abeokuta Ogun State

24 NWABUISI Olanrewaju Florence Michael Otedola College of Primary Education, Noforija Epe, Lagos State

25 ODUNAYO, Henry Adewale (PhD) Adeniran Ogunsanya College of Education, Ijanikin, Lagos

26 OGUNKOYA O. A. (PhD) Olabisi Onabanjo University, Ago Iwoye, Ogun State, Nigeria

27 OJO Olanipekun James, PhD Mountain Top University, Ogun State

28 OLADIMEJI, Maruf Sanjo (PhD) Olabisi Onabanjo University, Ago-Iwoye

29 Omoare Emma. O. Ogun State Institute of Technology, Igbesa, Ogun State.

30 OYALAKUN, Daniel Oluwaseun Federal University of Agriculture, Abeokuta, Ogun State, Nigeria

31 OYEWOLE Adegboyega Sule Michael Otedola College of Primary Education, Noforija Epe, Lagos State

32 Professor Kuye, O. L. University of Lagos, Akoka, Lagos.

33 SHONUBI, Akeem Olalekan (PhD), McPherson University, Seriki-Sotayo, Abeokuta, Ogun State, Nigeria.

34 TORIOLA Anu Keshiro Hallmark University, Ijebu-Itele

35 Williams, O. D. Hallmark University, Ijebu-Itele, Ogun State

36 YUSSUFF, Rukayat Omobolanle (Ph.D)

Lagos State University, Ojo, Lagos.


1

CONTINGENCY MANAGEMENT THEORY AND BUSINESS SURVIVAL IN A TURBULENT

ENVIRONMENT: EVIDENCE FROM NIGERIAN BANKING SECTOR

1Professor Kuye, O. L., 2Adebisi S. A. (PhD) & *3Bakare, N. A 1,2&3 University of Lagos, Akoka, Lagos.

*Corresponding Author: nimatbakare @yahoo.com

Abstract For any business to survive in today’s business environment, it must understand certain factors that can impede the success of the business due to the high volatility of the business environment. Nigerian business environment has become one of suchenvironments that keeps changing and so many variables are evolving which may either positively or adversely impact on the success of the business. The banking industry has been faced with high level of technology innovation and there is need for good leadership to help with various changes in the environment in order to ensure their survival. The focus of this study is contingency management theory and business survival in a turbulent environment in the banking sector. Itapplied a quantitative approach and the data were collected using the questionnaire. The secondary data was extracted from the Central Bank of Nigeria, World Bank index statistics. Descriptive statistics like percentages and charts were used to analyse the technological trends in the banking industry while Regression Analysis techniques was adopted in analysing the impact of contingency management theory on business survival in a turbulent environment. The result revealed a positive significant relationship amongst the variables; technological disruption, effective leadership and change management (re-capitalisation policy, merger and acquisition and downsizing) and the business survival in the banking sector.

Keywords: Banking Environment, Business Survival, Contingency Management, change management, effective leadership management, technological disruption.

1.0 INTRODUCTION Survival of business in today’s business environment is contingent upon certain factors and

situations. Nigerian business environment has become turbulent every day sincethe environment keeps changing and so many variables are evolving which may either positively or adversely

impact on the success of the business. Over the years, Nigerian banks have undergone several

reforms all in the bid to ensure sustainable progress, sound and safe banking environment as well as build stakeholders’ trust.The necessity to efficiently and effectively operate banking

services in the Nigerian banking sector is predicated upon the situations available in the present environment (Binugo & Aregbesola, 2014). Moreover, these days, the assessment and progress

of corporate banks are largely evaluated by the degree of connection and interconnectivity with people and customer-driven solutions the banks offered. Thus, the survival strategy of banks in

the present Nigerian business environment is a mixture of many factors. One of it is customer-

centric which will create a customerexperience, and this is achieved by disruptive technology, good leadership management. Improving profitability index which means that banks needed to

realise a considerable large amount of profit in other to stimulate sustainable growth and development in the banking environment. Another surviving business strategy to banks today is

an employer-employee cordial relationship. Good recruitment procedures, persistent employee

training and development opportunity and rewarding motivational techniques are all essential to employee, development and retention. The better the employees, the better the bank’s survival

and success become. Maintaining better liquidity stand is another means of ensuring survival position of banks in Nigeria. Having the standard capital requirement in possession guarantee

survival of banks in Nigeria present banking environment.

The above explanations are susceptible to situations and events available at the moment and

thus, the need for contingency management theory becomes relevant in the management and operations of banks in Nigeria. Contingency management theory is animprovement of the



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situational dimension and focuses on establishing situational variables that best fit the most

appropriate style of management in any given situation. Contingency management theory is an organisational management approach that prescribes no one single best way of managing an

organisation, make informed decisions but is dependent on the available situation at that moment (Pratono, 2016). For any organisation to have a good plan, it must take cognisance of

what operates in his external and internal environments. Contingency management theory is

applied to prevailing right situation at the moment. Presently, this is what is applicable in Nigerian banks as many strategies have been adopted to manage the affairs of the banks in

other to ensure its success. Of such is the introduction Recapitalisation strategy in the banking industry in order to combat the prevailing problem of bankruptcy in the economy. Also Merger

and acquisition hitherto have been one the major instruments in the hands of the management

used during crisis periods. Other contingencies approach adopted by the management of banks ranging from downsizing, placing seemly unreachable high financial targets for employees in the

bank among other tactics.

However, the contingency theory of management is based on the philosophy that managers are opened to several alternatives meansat their disposable to make informed choices in their

organisations in respect to diverse variables. It requires flexibility on the part of managers to assess each situation and make decisions exceptionalto those situations (Yulk, 2011). Application

of contingency theory necessitates a leader to remain vigilant and avoid any form of rigidity in

terms of procedures, polices and organisational rules and adopt conventional means in approaching any challeges or decision in the organisation.. The benefits of applying contingency

management tactic to managing organisations will enable managers to establish causal and effect relation of any challenging situation facing managers at the workplace (Lorsch, 2010). It

helps managers to understand the causes of individual issues instead of over-stretching on a particular problem of concentrating on the outcome of the issue, an individual manager who has

a better idea of the relevance of contingency management theory will tend to fully establish and

identify all the main predictors of the challenge (Boyd, Haynes, Hitt, Bergh, & Ketchen, 2012).

The militating factors against survival of banking sector in Nigeria are, however, market forces of demand and supply. Competition, global and information technology are some of the components

that increased the challenges that banks face with in today corporate banking sector, which has

led to great transformation in Nigeria. Furthermore, customers’ choices, preferences, wants and awareness are rapidly changing every now and then. All of these changes have given banks

impetus to have new rethink, better and more effectiveways of operating banks with members of the public more profitably. Another surge against the success of banks in Nigeria is the incidence

of weak+ capital base that engulfed nearly all the banks and this has led to reforms upon upons.

Majority of the bank are not liquid, solvent. Previously before recapitalisation majority of the banks did not have sufficient fund to meet up with regulatory framework of the apex bank and it

posses great threat to the survival of the banks. Ethics and professionalism challenge is another cankerworm that has eaten deep the fabric of Nigeria banks. Ethics lay emphasy on the need for

individual to embark on doing the right thing at every ponit in time. A set of value systems revolve around accepted norms of behaviour guiding the conduct and operations of banks in

Nigeria. Currently, the Apex bank in Nigeria (CBN) has not not relent effort effort in intervening in

any form of corruption in the banking industry among other various unethical issues. These were the succeeding outcomes of unethical behaviour from both management and employees of banks

in Nigeria. Good corporate governance practices has also become elusive in Nigeria banking system. Suitablesupremacy is crucial for upgrading of corporate survival, wooingstakeholders. It

is saddeing that a whole lots of banks in Nigeria lack the required moral ethics in conducting

business as exoected. Majority of the banks failed to adhere to code of corporate governance which is suffice enough to mitigate bank distress. Low gross domestic product (GDP) growth is

another factor hamepring the survival banks in Nigeria. Banks face with multiple threats from operating environment, reduced value in prices for oil and reduction in the value of foreign


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currency posses big challenge to corporate success of banks. Dwindling in the economic

actitivites and act of averting risk by the banks persistently lead to unresponsive and weak growth in the credit as well as earnings generation in the future. The national economy of Nigeria

experience a declining growth in the economic in the year ended 2015, the amount came down to an estimated 3% and by extension unpleasantly influences the banking sector (Ekpo, 2017).

Implementation of treasury single account (TSA) policy is another seemly threat to the survival of

the industry in Nigeria. The applicationof TSA policy has become a challenge as the states and other government agencies and parastatals that save lupsom of money in the bank could no

longer embark on such act due to the fact that this money has to be forwarded the the federal government account (TSA) for necessarily acountability. The banks in the past used this money

as loans for their customers and other forms of transactions, gaining a whole lots of interest from

it and with the adent of the TSA all doors to such transactions were shut at them leaving them in great dilemma and challenges.The highest percentage of money used by the banks for their

business transactions came from the government parastatals but with the TSA Policy, they fell short of finance, which was a great loss to them (Kontein, 2017). Besides, other turbulent threats

against the survival of banks in Nigeria with its consequential adverse influence are failure to meet customers expections, regulatory pressure, dwingling in the foreign exchange reserves, fall

in global prices of oil that lead to possible reduction in the volume of government revenues which

have resultant effect on interest rates in the banks. These are the challenges that majority of Nigeria banks encounter which call for situational solution or contingency strategy. In line with

the aforementioned challenges in the banking industry, this research work tends to show the effect of technology innovation, effective leadership management and change management on

the survival and sustainability of the banking industry.

1.1 Research Objectives This paper has decided to investigate some significant variables from contingency management

theory in relation to Nigeria banking operative practices. Therefore, this study will demonstrate

these three elements on the survival of banks in Nigeria: i. investigate the significance of technology distruption on the survival of banks in Nigeria.

ii. investigate the impact of effective leadership management on the business survival of Nigerian banks.

iii. assess the impact of change management on the business survival of Nigerian banks

1.2 Research Hypotheses

Ho1: Technology disruption does not have significant influence on the survival of banks in Nigeria

Ho2: Effective leadership management do not have significant influence on the business survival of banks in Nigeria

Ho3: Change management (re-capitalisation, merger and acquisition and downsizing) do not

have significant impact on the business survival of banks in Nigeria Ho4: Combined effect of technology disruption, effective leadership management and change

management (re-capitalisation, merger and acquisition and downsizing) on the business survival of banks in Nigeria

2.0 LITERATURE REVIEW

2.1 THOERITICAL FRAMEWORK The theories that underpin this research work are Survival-BasedTheory, Resource-Based Theory

andContingency Management Theory.

2.1.1 Survival-Base Theory Schumpeter (1934), Alchian (1950), Harrod (1939) and Marshall (1949) were economist

researchers that first introduced the survival-base theory. Their focus was directed to how

industry must compete to survive in their environment regardless any form of complexities or changes. Nelson & Winter (1982) opine that firms must strive for survival in their turbulent


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environment. This theory therefore assumes that for any organisation to survive there must be

effective and systematic use of strategies in his operation taking into cognizance its ever-changing environment (Khairuddin 2005). In line with the above, researchers claimed that the

success story of Mc Donald has been linked with the ability to harness high level of efficiency with its workplace environment (Lynch 2000). Nevertheless, it is appropriate to make use of

different strategies which invariably the best of all the strategies will systematically and naturally

fit into the environment.

This theory is also applied in the field of organisations’ turnaround; adaptation to volatile/hostile environment, government policies, information technology, merger/acquisition, competitors

amongst others can result into turnaround for organisations, whereby organisation lay-off workers, reposition its products or sell of its under-capacity assets in order to strengthens their

condition, thereby ensuring its efficiency and survival in its environment.

2.1.2 Resource-Based Theory This theory assumes that the resources and capabilities of an organization determines its

performance and survival in the environment it resides (Barney 1991). These resources could be tangible (examples of which are assets (physical) of the organization, financial capital) intangible

this ranges from quality of the product, brand name as well of the image in respect to the brand)

and personnel-based resources (technical know-how, knowledge assets) Grant (1991).

Russo & Fonts (1997) opine that the capability of an organization assist in the achievement of

competitive advantage; which is also dependent on how the organization assembles, integrates

and deploys its tangible, intangible and personnel resources in order to attain sustainable competitive advantage thereby ensuring its survival in its turbulent environment.

2.1.3. Contingency Management Theory

This theory came into use in 1960 with the work of researchers like Burns & Stalker (1961), Lawrence & Lorsch (1967) and they opine that situation in the organization will determine the

next line action. Organization can achieve effectivenesswhen organization is perfectly aligned with the current situation at hand. Donaldson 2001 opines that effectiveness could be achieved

by determining and understanding the basic characteristics and features of the organization and

effectively fitting it the current situations.Hofer, 1975; Schoonhoven, 1981; Tosi & Slocum, 1984; Khairuddin, 2005 noted that Contingency theory has received a standing ovation by different

scholars in the area of strategy and organizational studies. This theory has single handedlybeen nominated by scholars from one hundred and ten (110) other theories (Miner 1984).

Early researchers believed that organization can achieve high performance when changes in

organizational size, Structure and Technology is effectively managed, and that there should be a perfect fit between these changes and the organization thereby ensuring organizational

sustainability,Child (1975); Gerwin (1979) and Chandler(1962).

2.2 TECHNOLOGY DISRUPTION AND BUSINESS SURVIVAL The banking industry is recognized for its prominent act in the adoption of technology in order to

attain sustainability in its operations. Over the last decades, there has been a major huge

investment in technology and development of varying forms of application to remain competitive in its turbulent environment (Fallon 2010). Disruptive technology requires an effective leadership

management whereby the organization will understand and appreciate the trend of technology and as well ensure fit between the technology and personnel in order to compete effective in the

environment and ensure its survival in the turbulent environment. The major challenges leaders

are battling with in recent times is the technology disruption (Anderson & Tushman (1991). Managers must ensure adaptability to this ever-changing and emergent environment and

continue to follow the trend of this disruption through adopting innovative means in order to stay competitive to attain competitive advantage in the industry, (Gatignon, Tushman, Smith &

Anderson 2002).


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2.3 EFFECTIVE LEADERSHIP MANAGEMENT AND BUSINESS SURVIVAL

Leadership is a concept with no one single definition, different explanations has been given to the concept depending on individual belief or situation. Leadership is an integral part of

organizational behaviour with varying theories analyzing its styles, traits, strategies and situational approaches used by different leaders at a given point in time. Leadership Management

has been viewed as an important element in an organization that can predict the performance of

an organisation as well as that of the employees, (Rollinsin, Broadfield & Edwards 2001). Leadership is also a process whereby individual strengths and weaknesses are effectively

managed, (Gray 2004). Effective Leadership Management is characterized by the ability of the leader to ensure employees sense of belongingness, thereby harnessing the strength and

weaknesses of the employees in the business, which in turn creates everlasting opportunities and

acceptance of any form of change in the organization.The survival or firm’s performance is dependent on the type of leadership in an organization;therefore, organization must ensure that

there is fit between the leadership skills and behaviour in order to effectively manage challenging situations (Mc Grath & MacMillan 2000; Teece, Pisano & Shuen 1997). In view of this leaders

determine the survival or the performance of an organization, therefore they must study the external and internal environment of the business and opportunities that will create competitive

advantage and survival of the business.

2.4 CHANGE MANAGEMENT AND BUSINESS SURVIVAL

Moran & Brightman 2001 mentioned that Change management isviewed by researchers as the process whereby an organization at every point in time renew its course of action, organizational

structure and organizational competencies in order to meet up with both internal and external challenges. Change is an irresistible element in ensuring the survival and performance of an

organisation. Invariably organization is expected to know at every point in time the needs at present and in the future, which would aid its innovativeness as well as attaining competitive

advantage in the industryBurnes (2004). Burnes, 2004; Rieley & Clarkson 2001 opine that

organization change and organizational strategy are termed as siemens twin within the organization.In line with the, change require highly defined managerial skill (Senior, 2002).

Graetz (2000) opines that Change has contributed immensely to the success of an organization thereby ensuring high level of technological innovation, knowledge management, and effective

management system/style.

Luecke 2003; Okumus and Hemmington 1998 opine that for any organization to compete effectively, achieve competitive advantage and survive in its environment must create room for

change thereby allowing innovativeness. In the same vein Balogun and Hope Hailey (2004)

mentioned that failure of organization has been linked to inability of any organization to initiate change programme as demanded by the ever-evolving environment.


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2.5 CONCEPTUAL FRAMEWORK

3.0 RESEARCH METHODS

The study adopted quantitative research methods. Descriptive research design and purposive sampling procedures were used in the determination of the study sample size of three hundred

(300) selected staff in the banking industry within Lagos Mainland and Lagos Island. Besides, the

use of survey questionnaire was also adopted to administer the research instrument to the target sample of workforce. The secondary data was also employed, and the data were extracted from

the Central Bank of Nigeria, World Bank index statistics.Regression Analysis technique was adopted as the preferred quantitative statistical tool to test all tested hypotheses and purposely

to establish whether or not significant relationships and influence exist among all the identified

research variables.

4.0 RESULTS AND ANALYSES H01: technology disruption does not have significant influence on the survival of

banks in Nigeria Secondary data analysis

Year 2012 2013 2014 2015 2016 2017

N’ m N’ m N’ m N’ m N’ m N’ m

Cheques 7,487,411 7,708,669 7,269,079 6,195,461 5,829,549 5,381,909

NEFT 13,753,178 14,367,950 14,563,804 13,087,085 14,584,802 14,946,463

ATM 1,984,990 2,830,533 3,681,980 3,971,651 4,988,133 6,437,592

POS 48,461 161,212 312,071 448,512 758,996 1,409,813

WEB 31,567 47,316 74,205 91,581 132,360 184,596

MMO 31,509 143,371 339,236 442,353 756,897 1,101,998

TOTAL 23,337,116 25,259,051 26,240,375 24,236,643 27,050,737 29,462,371

TECHNNOLOGY DISRUPTION

EFFECTIVE LEADERSHIP

MANAGEMENT

CHANGE MANAGEMENT

BUSINESS SURVIVAL

RE-CAPITALISATION

MERGER & ACQUISITION

DOWNSIZING


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Table 2 above showed the values for the cheques and non cheques activities (NEFT, ATM, POS,

WEB and MMO) in Nigeria between 2012-2017. The non-cheques activities denote the period where the use of various technologies is embraced by customers in the banking sector. It was

observed that there is an inversely relationship between the non-cheque and cheque, when the

non-cheques activities are increasing the use of cheques for transaction of businesses is decreasing. It showed that the values of E-banking transaction since the inception of the cashless

policy in 2012. The use of cheques reduced from N7.48trilion in 2012 to N5.38trillion in 2017, the use of Electronic Transfer for personal/business transactions increased marginally from

N13.75trillion in 2012 to N14.95trillion in 2017. In the same vein, the use of Automated Teller Machines (ATM) withdrawal had a tremendous increase from N1.8trillion in 2012 to

NN6.437trillion in 2017 while Point on Sales (POS) transaction increased from N48billionto

N1.41trillion in 2017, the Web Electronics Payment (WEB) mode of payment also witnessed an increase from N31billion in 2012 to N184billion in 2017, and lastly Magic Money Operation (MMO)

increased from N31billion to N1.301trillion in 2017.

2012 2013 2014 2015 2016 2017

Cheque 7,487,411 7,708,669 7,269,079 6,195,461 5,829,549 5,381,909

Non-Cheque 15,849,705 17,550,382 18,971,296 18,041,182 21,221,188 24,080,462

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Cheques NEFT ATM POS WEB MMO TOTAL

Value for E-payment transaction (2012-2017)

2012 N’ m 2013 N’ m 2014 N’ m 2015 N’ m 2016 N’ m 2017 N’ m


8

This analysis that there is an increase in the use of technology from 2012-2014. In 2015 there

was a decrease in the use of technology, from 2016 the use of technology picked. Though the increase was not as huge as expected when compared with the population of over 120,000,000

of Nigeria, but this could be as a result of lack of orientation and the inhibitors to use of technology from the customers point of view.

Regression (primary data)

H01: technology disruption does not have significant influence on the survival of banks in Nigeria Table 4.1.1: Presents regression analysis for technology disruption and business survival

Model R R Square Adjusted R Std Error of the Est. 1 .436a .190 .187 3.260

ANOVAa

Model SSq df Mean Sq. F Sig. 1 Regression 651.458 1 651.458 61.307 .000b Residual 2773.424 261 10.626 Total 3424.882 262

Coefficientsa Model Unstandardized Coefficients Standardized t. Sig Coefficients B Std. Error Beta 1 Constant 18.233 1.221 14.935 .000 Technology .389 .050 .436 7.830 .000 Disruption

Source: Researcher’s Field Survey (2019)

Dependent Variable: Business Survival in the Banking Industry (P<0.05) Predictors: (constant) Technology Disruption in the Banking Industry

The regression analysis of the Table 4.1.1. which revealedR coefficient equal to 0.436 established

a relationship between technology disruption and business survival in the banking industry in Lagos Mainland and Lagos Island. The R-Square value of 0.190 showed that only a maximum

19.0% of the variation inbusiness survival in banking industry could be explained by technology disruption. The F-statistic value of 61.307, p<.05 revealed the model’s goodness of fit to explain

the variations and to reject the null hypothesis. Therefore, this confirmed the alternative

hypothesis which states that technology disruption can significantly influence the survival of business in the banking industry. The Beta (β) values of .436also confirmed the significant

relationship between the variables. The value of t=7.830, p<.05 showed that banks that follow the trend of the new technology in the industry has surely guaranteed its survival.

0

10,000,000

20,000,000

30,000,000

40,000,000

2012 2013 2014 2015 2016 2017

Cheques and Non-Cheques

Cheque Non-Cheque


9

Regression H02: effective leadership management do not have significant influence on the

business survival of banks in Nigeria Table 4.1.1: Presents regression analysis for effective leadership management and

business survival

Model R R Square Adjusted R Std Error of the Est.

1 .483a .233 .230 3.172 ANOVAa

Model SSq df Mean Sq. F Sig. 1 Regression 799.111 1 799.111 79.431 .000b

Residual 2625.771 261 10.060

Total 3424.882 262 Coefficientsa

Model Unstandardized Coefficients Standardized t. Sig

Coefficients

B Std. Error Beta 1 Constant 14.924 1.443 10.345 .000

Effective .642 .072 .483 8.912 .000 Leadership style

Source: Researcher’s Field Survey (2019) Dependent Variable: Business Survival in the Banking Industry (P<0.05)

The regression analysis of the Table 4.1.2. which revealedR coefficient equal to 0.233 established a relationship between effective leadership style and business survival of banking industry in

Lagos Mainland and Lagos Island. The R-Square value of 0.230 showed that only a maximum 23.0% of the variation inbusiness survival in banking industry could be explained by effective

leadership style. The F-statistic value of 79.431, p<.05 revealed the model’s goodness of fit to

explain the variations and to reject the null hypothesis. Therefore, this confirmed the alternative hypothesis which states that effective leadership style can significantly influence business survival

in the banking industry. The Beta (β) values of .483also confirmed the significant relationship between the variables. The value of t=8.912, p<.05 showed that the style of a leader within the

banking sector can predict the survival of the business.

Regression

H03: change management (re-capitalisation, merger and acquisition and downsizing) do not have significant impact on the business survival of banks in Nigeria

Table 4.1.1: Presents regression analysis for change management and business survival

Model R R Square Adjusted R Std Error of the Est.

1 .666a .443 .441 2.703 ANOVAa

Model SSq df Mean Sq. F Sig. 1 Regression 1518.357 1 1518.357 207.860 .000b

Residual 1906.525 261 7.305 Total 424.882 262

Coefficientsa


10

Model Unstandardized Coefficients Standardized t.

Sig Coefficients

B Std. Error Beta 1 Constant 9.960 1.239 8.039 .000

Change .771 .053 .666 14.417 .000

Management

Source: Researcher’s Field Survey (2019) Dependent Variable: Business Survival in Banking Sector (P<0.05)

The regression analysis of the Table 4.1.3. which revealedR coefficient equal to 0.666 established

a relationship between change management (recapitalization, downsizing and merger/acquisition) and business survival of banking industry in Lagos Mainland and Lagos

Island. The R-Square value of 0.443 showed that only a maximum 44.3% of the variation inbusiness survival in banking industry could be explained by change management. The F-

statistic value of 207.860, p<.05 revealed the model’s goodness of fit to explain the variations and to reject the null hypothesis. Therefore, this confirmed the alternative hypothesis which

states that change management can significantly influence the business survival in the banking

industry. The Beta (β) values of .666also confirmed the significant relationship between the variables. The value of t=14.417, p<.05 showed that banks that the way and manner an

organization manages change in terms of re-capitalisation, downsizing, merger or acquisition determines its survival in the sector.

Regression H02: Combined relationship among technology disruption, effective leadership

management and change management (re-capitalisation, merger and acquisition and downsizing) on the business survival of banks in Nigeria

Table 4.1: Relationship among components of Contingency Management theory and

Business Survival in the Banking Industry

Sig. N Survival Tech. Disruption Leadership Change

Survival .000 263 1

Technology .000 263 .436** 1

Leadership .000 263.483** 664** 1

Change .000 263.666** .543** .775** 1 Management

** Correlation is significant at the 0.01 level (2-tailed).

Source: Researcher’s field survey (2019)

Table 4.1indicates the relationship between the elements of contingency theory management

andbusiness survival. The Pearson correlation coefficients show positive and statistically significant relationship between technology disruption and business survival (0.436, P<0.01);

effective leadership style and business survival (0.483, P<0.01) and change management and business survival (0.666, P<0.01). These results showed that though each of the four elements

of contingency management theory is associated with business survival of banks, but the change


11

management had the greatest impact with a value of 0.666. This result indicated that during

turbulent situation recapitalization policy, merger and acquisition and downsizing were the major instruments that were used for business survival in the banking industry.

4.1 DISCUSSION OF FINDINGS

Theresults revealed that there is positive relationship between business survival and technological disruption, effective leadership style and change management which comprise of bank

recapitalization policy, merger and acquisition and downsizing. The change management had the greatest impact on the business survival with a value of 44.3% while technological disruption and

effective leadership style had values of 19.0% and 23.3% respectively. The correlation values of

the component of contingency management theory (technology disruption, effective leadership management and change management) revealed a positive relationship with the business

survival in the banking sector; 0.436, 0.483 and 0.666 respectively. This indicated that the recapitalization policy, merger and acquisition as well as downsizing had contributed immensely

to the survival of banks during the turbulent period. These were important tools in the hands of

managers for combating crisis. Nevertheless, the effective leadership style had its positive contribution to survival of business in the banking industry but much needed to be done in the

area of technological disruption with the lowest score of 19.0% though small but a developing country like Nigeria could use this as a major tool for business survival in any challenging or

turbulent periods.

5.0 CONCLUSION AND RECOMMENDATION This study was conducted in order to determine the effect of technological disruption, effective

leadership style and change management (components of contingency management theory) on business survival in the banking industry. The result showed a positive significant relationship

amongst the variable with the change management which comprised of bank re-capitalization

policy, merger and acquisition and downsizing contributing immensely to business survival in a turbulent period. Furthermore, the effective leadership management and technological disruption

were effective tools for business survival. The leadership style in any organization must create room for innovative thinking in order to achieve optimal results, allows for prompt and effective

communication, employees roles and responsibilities should be clearly defined, and the

employees be highly motivated.Technology innovation which is lagging behind in the banking sector in Nigeria needed to be highly improved. There is need for Nigeria banks to embrace

technology disruption in totality in order to measure up with their counterparts in other countries. This will aid the adoption of new technologies, creating effective service delivery to customers,

competing effectively home and abroad, achieving competitive advantage, enhancing their

capacity and satisfying customers optimally.

This study therefore recommends that banking sector should adopt high level of technology

innovation with the help of visionary leader, that understands the use of contingency approaches to issues at all point in time.


12

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Balogun, J. and Hope Hailey, V. (2004). Exploring Strategic Change, 2nd edition (London:

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perspective in SMEs. Business Process Management Journal 22: 368–382. Yukl, G. (2011). Contingency theories of effective leadership, in The SAGE Handbook of

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https://infoguidenigeria.com/challenges-facing-banks-nigeria/on


13

EFFECT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA

*O. D. Williams & S. S. Abere Department of Economics, Hallmark University, Ijebu-Itele, Ogun State

*Corresponding Author: E-mail: [email protected] Tel.: +2347038676564

Abstract The study examines the relative effects of recurrent and capital expenditures on economic growth in Nigeria using the ARDL technique along with Beta-Coefficient. The technique reveals the relative effects of recurrent and capital expenditures on output growth in both the short-run and the long-run. The results show that the relative effect of capital expenditure is more pronounced than that of recurrent expenditure in the short-run while the reverse holds in the long-run. Also, the Wald Test causality results reveal a bi-directional causal relationship between capital expenditure and economic growth but a unidirectional causal relationship between recurrent expenditure and economic growth in Nigeria as causality runs from recurrent expenditure to GDP but not the other way round. The study concludes that government spending on infrastructures across the country is negligible compared to other countries, and therefore, recommends that it should be significantly improved upon and directed towards projects that are capable of engendering economic growth. Also, government should encourage government-private partnership so as to boost the productive capacity of the economy.

Keywords: Recurrent Expenditure, Capital Expenditure, Economic Growth, ARDL, Causality

1. Introduction

There is no gainsaying in the fact that government expenditure has served as a yardstick for measuring the effectiveness of fiscal policy on both economic growth and economic development

across the globe. Public expenditure has always been a component of fiscal policy which is being

used as an economic tool to influence economic growth. Mobolaji (2014) argues that, in most countries today, government intervenes in undertaking some major roles of allocation,

stabilization, distribution and regulation. Government focuses on achieving macroeconomic objectives such as economic growth and development, full employment, price stability and

poverty reduction.

Economic growth is an indicator which portrays the economic performance of a country. Thus, as an economy is growing, the economy’s performances become noticeable and these call for

analysis. Musgrave (1989) describes public expenditure as a tool used to achieve three major

objectives which are: allocation, distributive and stabilization functions. However, Abu and Abdullahi (2010) posit that government performs two major functions, and these are: provision

of security and provision of certain public goods. This protective function and security involve creation of law enforcement of property rights, protection of life and property, provision of

education and health, among others.

There exist a lot of irregular activities in the Nigerian economy, and these include financial indiscipline and other fraudulent activities being perpetrated by the public office holders. These

activities have adverse effects on all phases of human endeavours as they have led to the

collapse of several businesses and financial institutions – and these eventually affect both internal and external activities taking place in the country. Gylych and Mohammed (2016) attribute these

irregular activities to several factors such corruption, indiscipline in the government sector, lack of proper accountability, poor wages and salaries structures that can bring about low economic

productivity, loss of trade relations with other advanced countries. Another problem facing the

Nigerian economy is the heavy dependence on revenue from the oil sector. This dependence has been affecting the size of government expenditure in the country over the years. Given the

preponderance of oil revenue in the total government revenue, government expenditure has been rising rapidly with the increasing oil prices. The Nigerian economy has been argued to



14

portray a direct relationship with the global oil prices. This is based on the fact that when oil

prices rise, both government revenue and expenditure rise, and vice-versa.

Meanwhile, Mitchel (2005) opines that a large and growing government is not conducive for better economic performance. Government expenditure in Nigeria has never stopped increasing

up till date, hence, the problem lies on whether the economy is experiencing growth with the continuous rise in expenditure. Gylych and Mohammed (2016) argue that whenever the rate of

government spending on health and education increases, the outcome is higher rate of economic

growth. Government spending on infrastructures such as road projects, transportation, electricity, water, and agriculture attracts more investments and increases the profits of firms and incomes

of individuals, thereby accelerating economic growth. Fiscal policy is one of the key channels through which the government intervenes directly in the economy of a nation. This involves

manipulating the government revenue and expenditure towards influencing the workings of the economic system. Government revenue sources include different forms of taxes, rents, and

profits, among others. The expenditures include government spending on defence, education,

and health.

There exist two basic components of government expenditure and these are recurrent

expenditure and capital expenditure. Recurrent expenditure refers to government’s expenses on

goods and services (wages and salaries), interest payments, subsidies and transfers. Capital expenditure, on the other hand, refers to government’s expenses on infrastructures, social and

economic activities. Over the years, the recurrent expenditure of the Nigerian economy has been increasing while the capital expenditure has been decreasing. This is not far from the fact that

the government devotes more finances into recurrent expenditures (payment of salaries) than

the capital expenditures (infrastructure, social and economic activities). It may not be surprising then that the Nigerian economy is devoid of any form of significant development. The activities of

the labour and trade unions have also contributed to the increasing pattern of the recurrent expenditures in the country. Meanwhile, Abdullah (2000) states that government should increase

its capital expenditures in order to stimulate economic growth.

However, most extant studies in Nigeria focus on the influence of aggregate government expenditure on economic growth (Alimi, 2013; Okoro, 2014; Akinlo and Jemiluyi, 2018) while

little or nothing is said about the components of government expenditure. Also, the extant studies in the country do not provide information on the causal relationship between components

of government expenditures and economic growth, hence, this study.

The remaining sections of this paper are structured as follows: Section 2 covers the literature review while section 3 focuses on the methodology used for the study. Section 4 entails data

analyses and discussion of results whereas, section 5 concludes the paper.

2. Review of Literature 2.1 Theoretical Review

Wagner (1883) asserts that government expenditure is rather a consequence but not a cause of

national income. This assertion is premised on the ground that the government expenditure increases because of industrial and economic growth in a country. The theory suggests that if

there is industrial development in an economy, the result will be increased government expenditure. However, Peacock and Wiseman (1961) argue that the growth of public expenditure

follows political and economic paths.

Unlike Wagner’s law, Peacock and Wiseman (1961) maintain that government expenditure, over the decades, has been growing in step-like pattern. This pattern is ascribed to the displacement

effects of political upheavals on public spending. It is argued that during socio-political crises,

such as civil war and epidemic, people’s tax tolerance level is highlighted and the government often takes advantage of this to raise the level of taxes in order to increase revenue to combat

such crises. This upward review of taxes has displacement effect, in that, after the crises, the tax never reverse back to the pre-crises level; thus creating a new plateau of government


15

expenditure level until the next crisis arises. Hence, the Federal Government uses each crisis as

an excuse to increase its fiscal roles on sub-national units of administration, for instance, “State of Emergency”.

Furthermore, Keynes believes that increasing savings in the economy will not help but spending

will help. Keynes assertion is that increasing government spending will lead to increase in economic growth through expansionary fiscal policy. Even though Wagner, Peacock-Wiseman

and Keynesian theories are more useful for explaining the causal relationship between government expenditure and economic growth, the theories are not capable of explaining the

determinants of long-run growth rates and the short-run dynamics towards a steady state.

However, Endogenous growth theory appears to be the most debatable theory because it is capable of explaining the determinants of long-run growth rates and the short-run dynamics

towards a steady state.

2.2 Empirical Review Several studies have been carried out on the relationship between government expenditure and

economic growth in both developed and developing countries. Mwafaq (2011) examines the impact of public expenditure on economic growth using time series data on Jordan. The result

shows that aggregate government expenditure has significant positive impact on the GDP growth

of Jordan during the study period. Similarly, Sikiru and Umaru (2011) study the causal link between government expenditure and economic growth in Nigeria using Engel-Granger approach

and error correction model. The results show that productive expenditure has positive impact on economic growth.

Meanwhile, some other scholars believe that increase in government expenditure does not result

in economic growth but rather diminishes the overall performance of the economy (Laudau, 1983; Nurudeen and Usman, 2010). Besides, Omitogun and Ayinla (2007) examine whether there

is any significant relationship between government expenditure and economic growth in Nigeria

using the Ordinary Least Squares (OLS) method. The study shows that fiscal policy has insignificant effect on economic growth in Nigeria. Likewise, Akinlo and Jemiluyi (2018) examine

the causal link between economic growth and government expenditure in Nigeria, and the results show a unidirectional causality running from GDP to government expenditure. Also, Eberhardt

and Presbitero (2015) investigate the existing relationship between economic growth and public

expenditure in 105 developing, emerging and advanced economies, and the results show a non-linear relationship between the variables.

Nevertheless, some studies have focused on the effects of disaggregated government

expenditures on economic growth. Ekpo (1995) found that capital expenditure on transport, communication, agriculture, health and education all have positive effect on private investment in

Nigeria, which subsequently boosts economic growth of the economy. Abdullah (2000) analyses the relationship between government expenditure and economic growth and suggests that

government should increase its capital expenditure such as spending on infrastructure as well as social and economic activities coupled with the encouragement of the private sector by the

government to boost economic growth. Niloy and Oisborn (2007) study the effect of public

expenditure on economic growth using 30 developing countries. The results of the study reveal that capital expenditure of the countries has a significant positive relationship with the GDP of

the countries while recurrent expenditure does not have significant relationship with economic growth.

In the same vein, Oyinlola and Akinnibosun (2013) examine the relationship between public

expenditure and economic growth in Nigeria between 1970 and 2009. The study uses components of public expenditure such as recurrent expenditure, capital expenditure,

administrative expenses, community and social service and transfer. The results show the

presence of a co-integrating relationship between the variables in the system – suggesting the existence of a long-term relationship among them.


16

Studies by Gylych and Mohammed (2016) and Idris (2017) maintain that whenever the rate of

government spending increases, the outcome is higher rate of economic growth. Gukat (2015) analyses the relationship between government expenditure on human capital and economic

growth in Nigeria. Using the error correction mechanism, the results show that public expenditure on human capital has a significant positive impact on economic growth in Nigeria. Likewise,

Ebong et al. (2016) assess the impact of government capital expenditure on economic growth in

Nigeria, using an OLS technique. The results show that the disaggregated expenditures do not crowd-out private investment. Udoffia and Godson (2016), as well, investigate the impact of

government expenditure on the Nigerian economy using the OLS estimation technique and the results show that both capital and recurrent expenditures have a positive effect on the real GDP.

In summary, the literature on the effect of government expenditure on economic growth is still

mixed and inconclusive, hence, there is need for further studies on the subject matter.

3. Methodology

3.1 Model Specification

In the recent years, economists do not only focus on the economic variables that are related, but also the direction of the relation as well as the magnitude. The Endogenous Growth model is the

theoretical framework used for this study. The theory looks into the determinant of technology rather than assuming that it is exogenous. Consider the aggregate production function given as: 𝑌𝑡 = 𝑓(𝐴, 𝐾𝑡 , 𝐿𝑡) (1) Where: Y = Aggregate Real Output

K = Stock of Capital L = Stock of Labour

A = Technology

Using a Cobb Douglas production function as a specific form of the above function yields Equation (2) as follows: 𝑌𝑡 = 𝐴𝐾𝑡

∝𝐿𝑡1−∝ (2)

Since the focus of this study is to determine the relative effects of recurrent and capital

expenditures on economic growth in Nigeria, the aggregate government expenditure is decomposed into recurrent expenditure (RE) and capital expenditure (CE). Representing Y by

GDP, L by RE, K by CE, A by oil price (OIP) and inflation rate (INF), hence, equation (2) is re-

specified as follows: 𝐺𝐷𝑃 = 𝑓(𝑅𝐸, 𝐶𝐸, 𝑂𝐼𝑃, 𝐼𝑁𝐹) (3)

Expressing Equation (3) in its explicit form and taking the logarithmic form of all the variables in the model, except inflation rate which is already in the rate form, Equation (3) becomes:

𝑙𝑛 𝐺𝐷𝑃𝑡 = 𝜃0 + 𝜃1 𝑙𝑛 𝑅𝐸𝑡 + 𝜃2 𝑙𝑛 𝐶𝐸𝑡 + 𝜃3𝑙𝑛𝑂𝐼𝑃𝑡 + 𝜃4𝐼𝑁𝐹𝑡 + 휀𝑡 (4) Where 𝜃𝑖(i = 0, 1, 2, 3, 4) are the parameters to be estimated, 휀t is the stochastic error term, and

other variables are as earlier stated.

3.2 Techniques of Analysis In an attempt to determining the relative effects of recurrent and capital expenditures on

economic growth in Nigeria, this study adopts the Autoregressive Distributed Lag (ARDL) approach developed by Pesaran, Shin and Smith (1996), Pesaran, and Shin (1999). The ARDL

technique does not necessarily require that the variables in the model to be I(1) or to be of the

same order. Hence, it can conveniently accommodate a mixture of I(0) and I(1) variables in a model. From Equation (4), the ARDL model is specified thus:


17

∆𝐺𝐷𝑃𝑡 = 𝛽0 + ∑ 𝜏𝑖∆𝐺𝐷𝑃𝑡−𝑖

𝑝

𝑖=1

+ ∑ 𝛿𝑖∆𝑅𝐸𝑡−𝑖

𝑞1

𝑖=0

+ ∑ 𝜃𝑖∆𝐶𝐸𝑡−𝑖 + ∑ 𝛾𝑖

𝑞3

𝑖=0

∆𝑂𝐼𝑃𝑡−𝑖 + ∑ 𝜗𝑖

𝑞4

𝑖=0

∆𝐼𝑁𝐹𝑃𝑡−1 + 𝛽1𝐺𝐷𝑃𝑡−1 + 𝛽2𝑅𝐸𝑡−1 + 𝛽3𝐶𝐸𝑡−1

𝑞2

𝑖=0

+ 𝛽4𝑂𝐼𝑃𝑡−1 + 𝛽5 𝐼𝑁𝐹𝑡−1 + 𝜖𝑡 (5)

Where is the differenced operator, 𝛽𝑖 , 𝜏𝑖,𝛿𝑖, 𝜃𝑖 , 𝛾𝑖𝑎𝑛𝑑𝜗𝑖are parameters to be estimated, p is the

number of lags of the dependent variable while qi is the number of lags of the explanatory variables.

3.3 Description and Measurement of Variables

3.3.1 Gross Domestic Product (GDP): This is used as a measure of economic growth. The real GDP is used as a proxy for economic growth of the Nigerian economy. It is the nominal GDP

deflated by the composite consumer price index. The real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced in a country at a given year and it is

expressed in base prices. 3.3.2 Government Expenditure (GEXP): Government expenditureis defined as the sum of

public consumption (purchases of goods and services and compensation of civil servants) and

public investments. The government expenditure is further disaggregated into recurrent expenditure (RE) and capital expenditure (CE).

3.3.3 Inflation (INF): This indicator is the periodic percentage increase in the cost of living as measured expressed by the value of the consumer price index (CPI). The rate of inflation is one

of the indicators considered by the authorities to set monetary policy. Increase in the price level

decreases the purchasing power of a currency. 3.3.4 Oil Price (OIP): The oil price is included in the model based on the fact that the Nigerian

annual budget has for long been strongly dependent on the oil revenue. The revenue from oil constitutes a major proportion of government expenditure in Nigeria. Even though the

determination of the volume of the domestic oil production lies substantially with the OPEC allocated quotas, technological improvement (typically emanating from the advanced countries)

as well as the uncertainties in the oil sector investments influence the level of oil production in

the country.

3.4 Sources of Data This study makes use of the secondary source of data for all the variables involved. These are

sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin. The annual data extracted from CBN publication are: Gross Domestic Product (GDP), Capital Expenditure (CE), Recurrent

Expenditure (RE), Consumer Price Index (CPI) which is a proxy of inflation rate in the study, and Brent Annual Average Domestic Oil Prices. All the data gathered are between 1985 and 2016 (32

years).

4. Data Analyses and Discussion of Results The Augmented Dickey-Fuller (ADF) and the Phillips-Perron (PP) unit root test results reported in

Table 1 reveal that all but one (LNINF) of the variables in the estimated model are I(1) when the

test is performed with intercept and linear trend (LNGDP, LNCP, LNRE, LNOIP, INT). However, when the test is performed with intercept alone, the results reveal mixture of I(0) and I(1)

variables as LNRE and INF are I(0) while the remaining variables are I(1) variables. Meanwhile, it has been established in the literature that ARDL technique is appropriate for handling the

combination of I(0) and I(1) variables. Thus, this study adopts the ARDL technique in its

estimate. The result of the ARDL Bounds Test in Table 2 shows that the computed F-statistic (21.22) is higher than the upper bound of the Critical Value Bounds, even at 1% level of


18

significance (4.68). Therefore, this study rejects the null hypothesis of no long-run relationship

among the variables in the model, and concludes that there exists co-integration among the variables.

With the confirmation of the existence of long-run relationship between the dependent variable

(LNGDP) and the independent variables (LNCE, LNRE, LNOIP, LNINF and INT), the unrestricted error correction form of the ARDL is used to obtain an estimate of the long-run parameters.

Based on the Akaike Information Criterion, the selected model is an ARDL (3, 3, 3, 1, 1, 1)

specification (see Figure 1). A result of this nature denotes that all the variables are dynamic in nature since all of them have lagged terms in the model. The Breusch-Godfrey Serial Correlation

LM Test portrays that the selected model does not suffer from the problem of serial correlation (𝐹 = 1.8264, 𝑃 = 0.2204) and (∗ 𝑅2 = 3.8193, 𝑃 = 0.1546). The implication of this result is that

the errors in the selected model are serially independent, and thus, the parameter estimates are

consistent. Similarly, the Breusch-Pagan-Godfrey Heteroskedasticity Test suggests no evidence of heteroskedasticity in the estimated model (𝐹 = 0.8080, 𝑃 = 0.6644) and (∗ 𝑅2 = 16.1040, 𝑃 =0.5165).

The result in Table 3 depicts a well-defined Error Correction term (ECT) with a negative sign in

line with a-priori expectation, and thus, buttresses the prior claim of long-run relationship

between the dependent variable and the independent variables. Also, the Error Correction term is found to be statistically significant at 1% level of significance (𝑡 = −5.81, 𝑝 < 0.01) with the

coefficient of -0.5616 which implies that if there is any distortion in the economy in the short-run,

the economy would adjust back to its equilibrium level by about 56% of the previous year’s disequilibrium.

From the results in the Error Correction model (Table 3) and the long-run model (Table 4),

capital expenditure does not have significant effect on GDP which is used as a proxy for economic growth (𝑡 = −0.25, 𝑝 > 0.05; 𝑡 = 0.55, 𝑝 > 0.05). This finding might be as a result of the

fact that the proportion of the national budget allocated to capital projects is very low compared

to the advanced countries where capital projects are given priority. Another factor that might have contributed to the insignificant effect of capital expenditure on economic growth might be

due to diversion of funds meant for capital projects into private use. This result conforms to the finding of Omitogun and Ayinla (2007) that fiscal policy has an insignificant effect on economic

growth in Nigeria. The result, however, contradicts the findings of the studies by Niloy and

Oisborn (2007), Gukat (2015), Udoffia and Godson (2016) which found that capital expenditure has a significant effect on economic growth. Meanwhile, capital expenditure at lag 2 has a significant positive effect on GDP (𝑡 = 2.49, 𝑝 < 0.01).

The results further show that recurrent expenditure does not have significant effect on GDP in the short-run (𝑡 = 1.11, 𝑝 > 0.05) while it has significant effect in the long-run (𝑡 = 6.99, 𝑝 <0.01). The short-run result is consistent with the finding of the study by Niloy and Oisborn (2007)

which found that recurrent expenditure does not have a significant relationship with economic

growth. The long-run result is in conformity with the finding by Udoffia and Godson (2016) that

both capital and recurrent expenditures have a significant effect on economic growth. Moreover, both lags of recurrent expenditure are individually statistically significant (𝑡 = −3.52, 𝑝 < 0.01; 𝑡 =−6.39, 𝑝 < 0.01).

However, the results in Table 5 indicate that the Beta-Coefficient of capital expenditure (0.1894)

is higher than the Beta-Coefficient of recurrent expenditure (-0.6122) in the short-run while the Beta-Coefficient of recurrent expenditure (14.0515) is higher than that of capital expenditure (-

0.6122) in the long-run. These results imply that the relative effect of capital expenditure is more

pronounced than that of recurrent expenditure in the short-run while the reverse holds in the long-run.


19

Meanwhile, the long-run causality test is carried out through Wald Test in order to understand

the causal relationship between components of government expenditures (CE and RE) and gross domestic product (GDP) which serves as proxy for economic growth in Nigeria. The causal

relationship between aggregate government expenditure (AGE) and GDP is as well considered in order to verify the validity, or otherwise, of some economic theories in the literature. The results

in Table 6 reveal that, with regard to the relationship between capital expenditure (CE) and gross

domestic product (GDP), the null hypothesis that capital expenditure does not cause economic growth in the long-run can be rejected at 5% level of significance (𝐹 = 5.12, 𝑝 < 0.05; 𝜒2 =20.49, 𝑝 < 0.01). This result is in line with the finding of the study by Sikiru and Umaru (2011)

that the productive expenditure has positive impact on economic growth in Nigeria.

The direction of causality, as well, is not the other way round as the null hypothesis that economic growth does not cause capital expenditure in the long-run can be rejected at the 5% level of significance (𝐹 = 6.84, 𝑝 < 0.05; 𝜒2 = 6.84, 𝑝 < 0.01). Thus, there is a bi-directional

causal relationship between capital expenditure and economic growth in Nigeria as causality runs from capital expenditure to GDP and vice-versa. The Chi-Square statistic, however, suggests that

the evidence in favour of causality running from capital expenditure to GDP is stronger than the

evidence in favour of causality running in the reverse direction.

Similarly, the results in Table 6 show that, with regard to the relationship between recurrent

expenditure (RE) and GDP, the null hypothesis that recurrent expenditure does not cause economic growth in the long-run can be rejected at 1% level of significance (𝐹 = 20.48, 𝑝 <0.01; 𝜒2 = 81.90, 𝑝 < 0.01). However, the direction of causality is the other way round as the null

hypothesis that economic growth does not cause recurrent expenditure in the long-run cannot be rejected at the 5% level of significance (𝐹 = 6.84, 𝑝 > 0.05; 𝜒2 = 6.84, 𝑝 < 0.05). Therefore, there

is a unidirectional causal relationship between recurrent expenditure and economic growth in Nigeria as causality runs from recurrent expenditure to GDP but not the other way round. This

finding might be as a result of the fact that recurrent expenditure has a significant multiplier

effect on the Nigerian economy. The results further show the causal relationship between aggregate government expenditure

(AGE) and economic growth (GDP) in the country. The null hypothesis that aggregate government expenditure does not cause economic growth in the long-run can be rejected at 5% level of significance (𝐹 = 4.75, 𝑝 < 0.05; 𝜒2 = 18.99, 𝑝 < 0.01). Conversely, the direction of

causality is the other way round as the null hypothesis that economic growth does not cause aggregate government expenditure in the long-run cannot be rejected at the 5% level of significance (𝐹 = 0.74, 𝑝 > 0.05; 𝜒2 = 3.68, 𝑝 < 0.05). Consequently, there is a unidirectional

causal relationship between aggregate government expenditure and economic growth in Nigeria

as causality runs from the former to the latter but not the other way round. This result is at variant with Wagner’s theory (Wagner, 1883) which states that government expenditure is rather

a consequence but not a cause of national income. The result, however, conforms to the postulate of Peacock and Wiseman (1961) that increase in government expenditure usually leads

to increase in economic growth, but not the other way round.

5. Conclusion The study investigates the relative effects of recurrent and capital expenditures on output growth

in Nigeria using the ARDL technique. The study found that capital expenditure does not have significant effect on economic growth in Nigeria as the proportion of government allocation to

capital projects is abysmally low – coupled with the high level of embezzlements of public funds.

Meanwhile, capital expenditure at lag 2 has a significant positive effect on economic growth. Also, the results indicate that recurrent expenditure has long-run statistically significant effect on

economic growth. Moreover, both lags of recurrent expenditure are individually statistically significant. These results further reveal that the relative effect of capital expenditure is more

pronounced than that of recurrent expenditure in the short-run while the reverse happens to be

the case in the long-run.


20

The Wald Test causality results portray the existence of a bi-directional causal relationship

between capital expenditure and economic growth in Nigeria. However, there exists a unidirectional causal relationship between recurrent expenditure and economic growth as

causality runs from recurrent expenditure to GDP but not the other way round. This result is attributed to possibilities of the multiplier effect of recurrent expenditure on the economy.

Similarly, there exists a unidirectional causal relationship between aggregate government

expenditure and economic growth in the country as causality runs from the former to the latter but not the other way round. This study, thus, upholds the theory of Peacock and Wiseman

(1961) but jettisons Wagner’s theory in Nigeria. The study concludes that government spending on infrastructures is still proportionally low and, therefore, calls for improvement in the

government allocation to capital expenditure as well as ensuring non-diversion of funds. Also,

government should encourage government-private partnership so as to boost the productive capacity of the country.

Table 1: Unit Root Test Results

Variable ADF Test PP Test

Remark

Intercept

Trend and

Intercept Intercept

Trend and

Intercept

LNGDP -2.3782 0.5365 -2.0132 0.5365

I(1)

(0.1558) (0.9989) (0.2799) (0.9989)

∆LNGDP -3.2834* -4.3309* -3.342285 -4.3202*

(0.0248) (0.0092) (0.0217) (0.0095)

LNCE -2.4145 -0.7771 -2.6023 -0.5438

I(1)

(0.1461) (0.9571) (0.1033) (0.9755)

∆LNCE -5.9057* -6.8749* -5.9145* -6.8647*

(0.0000) (0.0000) (0.0000) (0.0000)

LNRE -3.0806** -1.7090 -4.3563* -1.2951

Mixed

(0.0389) (0.7230) (0.0017) (0.8705)

∆LNRE - -9.1395* - -15.418*

(0.0000)

(0.0000)

LNOIP -1.0683 -2.3367 -1.0883 -2.4611

I(1)

(0.7155) (0.4033) (0.7077) (0.3436)

∆LNOIP -5.8145* -5.7126* -5.8145* -5.6925*

(0.0000) (0.0003) (0.0000) (0.0003)

LNINF -2.0818 -7.1141* -2.4598 -0.8848

I(1)

(0.2530) (0.0000) (0.1347) (0.9452)

∆LNINF -4.0018* - -2.7128*** -3.1799***

(0.0057) (0.0837) (0.0075)

INT -2.9864** -2.9813 -2.9847** -3.1137

Mixed (0.0473) (0.1559) (0.0475) (0.1208)

∆INT - -8.1330* - -6.3383*

(0.0000) (0.0001)

Note: (a) "()" are probability values, (b) "*", "**" and "***" denote stationarity at 1%, 5%

and 10% significant levels respectively, (c) "∆" denotes first difference operator.


21

Test Statistic Value k

F-statistic 21.21849 5

Significance I(0) Bound I(1) Bound

10% 2.26 3.35

5% 2.62 3.79

2.50% 2.96 4.18

1% 3.41 4.68

Table 2: ARDL Bounds Test

Critical Value Bounds

Variable Coefficient t-Statistic Prob.

D(LNGDP(-1)) -0.15 -1.65 0.1276

D(LNGDP(-2)) 0.19 2.18** 0.0521

D(LNCE) -0.01 -0.25 0.8075

D(LNCE(-1)) 0.00 -0.05 0.9586

D(LNCE(-2)) 0.07 2.49** 0.0300

D(LNRE) 0.05 1.11 0.2916

D(LNRE(-1)) -0.11 -3.52* 0.0048

D(LNRE(-2)) -0.18 -6.39* 0.0001

D(LNOIP) 0.05 1.63 0.1312

D(LNINF) 0.65 8.81* 0.0000

D(INT) 0.00 0.40 0.6956

ECT(-1) -0.56 -5.81* 0.0001

Table 3: Result of ARDL Error Correction Model

Note: * and ** represent 1% and 5% levels of significance respectively.

Variable Coefficient t-Statistic Prob.

LNCE 0.04 0.55 0.5906

LNRE 0.86 6.99* 0.0000

LNOIP -0.04 -0.47 0.6479

LNINF 0.17 0.96 0.3583

INT -0.02 -3.46* 0.0054

C 3.84 27.65* 0.0000

Note: * and ** represent 1% and 5% levels of significance respectively.

Table 4: ARDL Long-Run Result


22

Table 6: Wald Test Causality

Null

Hypothesis

Test Statistic

Conclusion Remark F-statistic Chi-square

LNCE → LNGDP 5.121629** 20.48652* There is causality from CE

to GDP Bi-directional

(0.0141) (0.0004)

LNGDP → LNCE 6.844122** 6.844122* There is causality from GDP to CE

(0.0213) (0.0089)

LNRE → LNGDP 20.47544* 81.90175* There is causality from RE to GDP

Unidirectional

(0.0000) (0.0000)

LNGDP → LNRE 2.650809 7.952426** There is no causality from

GDP to RE

(0.1060) (0.0470)

LNAGE →

LNGDP 4.748271** 18.99308* There is causality from

AGE to GDP

Unidirectional

(0.0454) (0.0008)

LNGDP → LNAGE 0.735231 3.676157 There is no causality from

GDP to AGE

(0.6345) (0.5969)

Note: (a) "()" are probability values, (b) "*", and "**" denote stationarity at 1% and 5%

significant levels respectively

Variable Coefficient** Standard Deviation*** Beta Coefficient****

Short-Run D(LNGDP) 0.1059

D(LNCE) -0.01 0.3267 -0.0308

D(LNCE(-1)) 0.00 0.3297 0.0000

D(LNCE(-2)) 0.07 0.3332 0.2202

0.1894*

D(LNRE) 0.05 0.264 0.1246

D(LNRE(-1)) -0.11 0.2798 -0.2906

D(LNRE(-2)) -0.18 0.2625 -0.4462

-0.6122*

Long-Run LNCE 0.04 1.4117 0.5332

LNRE 0.86 1.7303 14.0515

in Tables 3 and 4, and *** is extracted from Group Statistic while **** is computed through this formula:

βi* = βi (δi/δy )

Note: * denotes the summation of respective Beta Coefficient, ** is extracted from the ARDL Model

Table 5: Relative Effects of Capital and Current Expenditures


23

-4.48

-4.44

-4.40

-4.36

-4.32

-4.28

AR

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Akaike Information Criteria (top 20 models)

Figure 1: ARDL Model Selection References

Abdullah, H. A. (2000). The relationship between government expenditure and economic growth

in Saudi Arabia. Journal of King Saud University, Administrative science,12(2):173-191. Abu, N., & Abdullahi, U., (2010). Government expenditure and economic growth in Nigeria: A

disaggregated analysis. Business and Economics Journal, 4. Akinlo, A. E., & Jemiluyi, O. O. (2018). Government expenditure and economic growth nexus in

Nigeria: Evidence from non-linear ARDL and Causality Approaches, 4(1), 5 - 26.

Alimi, R. S. (2013). Government spending and national income: A time series and panel analysis for Nigeria, Ghana and South Africa. Research Journal of Financing and Accounting, 5(14), 55 – 69.

Eberhardt, M., & Presbitero, A. F. (2015). Public debt and growth: Heterogeneity and non-

linearity. Journal of International Economics, 97(1), 45-48. Ebong, F., Ogunike, F., Udongwo, U., & Ayodele, O. (2016). Impact of government expenditure

on economic growth in Nigeria: A disaggregated analysis. Asian Journal of Economics and Empirical Research, 3(1), 113 - 121.

Ekpo, A. H. (1995). Public expenditure and economic growth in Nigeria. AEERC Final Report, Nairobi, Kenya, 37(3), 13-34.

Gukat, B. T. (2015). An empirical analysis of the relationship between government expenditure

on human capital and economic growth in Nigeria. Journal of Economic and Financial, 3(1), 1 – 13.

Gylych, J., & Mohammed, M. (2016). The impact of government expenditure on economic growth

in Nigeria. Sacha Journal of Policy and Strategic Studies, 5(1), 15 - 23.


24

Idris, M., & Bakar, R. (2017). Public sector spending and economic growth in Nigeria: In search

of a stable relationship. Asian Research Journal of Arts and Social sciences, 3(2) 1 - 19.

Laudau, D. (1983). Government expenditure and economic growth: A cross-country study. Southern Economic Journal, 49, 783 - 792.

Mitchel, D. J. (2005). The impact of government spending on economic growth. Executive

Summary Backgrounder, 1831. Published by the Heritage Foundation 214, Massachusetts Avenue, NE Washington DC, USA.

Mobolaji, H. I., Usman, A., & Kilishi, A. A. (2014). Public expenditure and economic growth in Nigeria. Asian Economic and Financial Review, 1(3), 104 - 113.

Musgrave, B. (1989). Public Finance in Theory and Practice. New York: McGraw-Hill Book

Company. Mwafaq, M. D. (2011). Government expenditures and economic growth in Jordan. International

Conference on Economics and Finance Research IPEDR. IACSIT Press, Singapore, 4, 467-471.

Niloy, B., & Osborn, D. R. (2007). Public expenditure and economic growth: A disaggregated analysis for Developing Countries. The Management School, 75(5), 533-556.

Nurudeen, A, & Usman, A. (2010). Government expenditure and economic growth in Nigeria: A

disaggregated analysis. Business and Economics Journal, 4, 01 - 11. Okoro, A. S. (2014). Government spending and economic growth in Nigeria. Global Journal

ofManagement and Business Research Economics and Commerce, International Research Journal Publisher: Global Journals Inc. USA,13(5), 21 - 30.

Omitogun, O., & Ayinla, T. A. (2007). Fiscal policy and Nigerian economic development. Journal of Research in National Development, 5(2), 19-29.

Oyinlola, M. A., & Akinnibosun, O. (2013). Public expenditure and economic growth nexus:

Further evidence from Nigeria. Journal of Economics and International Finance, 5(4), 146-154.

Peacock, A. T., & Wiseman, J. (1961). The Growth of Public Expenditure in the United Kingdom,

London: Oxford University Press. Pesaran, M. H., & Shin, Y. (1999). An autoregressive distributed lag modelling approach to co-

integration analysis. In Econometrics and economic theory in the 20th century: The Ragnar Frisch Centennial Symposium. Cambridge University Press: Cambridge.

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Sikiru, J. B., & Umaru, A. (2011). Fiscal policy and economic growth relationship in Nigeria.

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Musgrave & A. T. Peacock (eds), Classics in the Theory of Public Finance, London:

Macmillan, 1958.


25

ENVIRONMENTAL SCANNING AND CUSTOMER VALUES OF SELECTED COMMERCIAL

BANKS: FRAMEWORK OF BUSINESS PERFORMANCE

IKOTUN, Sabic Idowu1, SHONUBI, Akeem Olalekan2 (PhD), EGWU, Bridget Uchenna3 1&2Department of Business Administration, McPherson University, Seriki-Sotayo, PMB 2094,

Abeokuta, Ogun State, Nigeria. 3Department of Business Administration, Oduduwa University, Ipetumodu, Osun State, Nigeria.

Corresponding Authors: [email protected] / [email protected]

Abstract Over time, there has been a shift away from using organisational capacity as sole metric of performance. This is because of its inherent limitations of business performance is broad-based progress that primarily depends on understanding of customer values, however, further advances in the direction of customer values have led to the concept of environmental scanning. The primary objectives of this paper are to examine the relationship between environmental scanning and customer values, and the influence of environmental scanning on customer values in the selected Nigerian commercial banks. The study adopted survey research design using cross-sectional administration of research instrument among selected banks with total population of 70,380 customers, and sample size of 1,490 customers calculated using Watson (2001) formula plus 30% of sample size determination as non –response rate or wrongly filled questionnaires. A structured questionnaire of six point Likert scale was used with response rate of 90.2% (1,344) Reliability and validation of items/constructs range between 0.75-0.85 as Cronbach-Alpha coefficient. Data collection was analysed using correlation and regression analysis. Findings showed that environmental scanning (ES) has a significant and positive relationship with customer values (CV) (r = .544, p<0.005), and also, environmental scanning has a significant positive influence on customer values of selected commercial banks in Lagos State Nigeria (β = .945, t= 23.724, p<0.05).The descriptive analysis indicated that ES as a process and systematic study of environment to identify needs and values for creating products and services ultimately desired by the bank customers. The study recommended that commercial banks should strategically employ technique of ES in an attempt to acquire information about organisations environment in order to apply the knowledge that would help management in its task of charting the organisational creating values and their performance, particularly in the area of product and service development for customer satisfaction.

Keywords: Business Environment, Customer Values, Performance, Commercial Banks

1.0 Introduction The importance of banking industry cannot be overemphasized as other sectors depend greatly

on it, hence the need for environmental- scanning which intends to facilitate customer values are quite imperative. Banking system is designed to assist sovereign nations to achieve objectives of

the macro-economy such as attainment of full employment, stable prices, high growth rate of

output and income, balance of payments’ equilibrium and equitable distribution of income (Lemo, 2015). In this regard, lack of appropriate incorporation of environmental scanning in the

repositioning agenda perhaps may lead to customer dissatisfaction and other challenges in the banking sector? Besides, most banking operations in Nigeria havenot embraced environmental

scanning that can lead to customer values. It has been established that various regulations and reforms have no bearing of promoting environmental scanning and as such it cannot lead to

customer values in their implementations (Afolabi, 2014).

It is in this respect we could then raise a fundamental investigation whether environmental scanning could effectively actualize customer values? The researchers considered investigating

these variables or factors perhaps if they might have constrained performance in the banking

industry.Nigerian banking sector had experienced series of crises which necessitates introduction of various regulations, inventing- supervisions and reform agenda, since historical development

of the banks. Among these crises were inadequate corporate governance, poor service delivery, high rate of customer switching, prominent dormant account operators, poor credit policy, non-



26

dividend declaration and over dependence on government funds, before introduction of single

treasury account (TSA) by federal government of Nigeria, no doubt some of these problems still persist in our nation’s banking institution (Correla& Wilson, 2011; Martyn, 2012). More

importantly that Nigerian government was mostly using policy induced rather than market and or customer driven approach. In addition, business environmental analysis for effective and efficient

operations of banks are not being harnessed through framework of customer analysis, thus

making environmental scanning a deliberate option of examining customer values. In this regard, researchers consider that many banks do not give adequate attention to their environmental

analysis, hence this study intends to determine the correlation and effect relationship between environmental scanning and customer values.

The main objective of this study is to determine the effect and relationship that exists between

environmental scanning and customer values in the selected commercial banks in the Lagos State, Nigeria. Therefore, it is germane to raise research questionswhich go thus: what is the

relationship between environmental scanning and customer values of selected commercial banks?

And does the environment scanning influence the customer values in the selected commercial banks? The two variables are identified in this study; these are environmental scanning and

customer values depicting independent variable and dependent variable respectively.

Environmental scanning measured by the regular information gathering and intelligent platform of taking decisions for the effective and efficient performance, while customer values are

measured in terms of meeting the expectations, desire, want, demand and needs of customers. Null-.hypotheses was stated as thus:

Ho1: There is no significant relationship between the environment scanning and customer values of selected commercial banks.

Ho2: Environmental scanning does not significantly influence customer values of selected

commercial banks.

2.0 Literature Review 2.1 Environmental Scanning

Environmental scanning concept can be gleaned from the concept of environment. The concept of environment has been widely explained by various scholars in different dimensions. Olagunju

(2004) referred to an environment in business management as totality of factors that affects internal and external environment of an organisation. Ogbojafor (2007) asserted that

environment in which an organisation exists could be divided into two parts – the external and

internal environment. The external environment includes all the factors outside the organisation which provides opportunities and poses threats to the organisation, while internal environment

refers to all the factors within an organisation which impart strength and cause weakness to the organisation.

Thus, environment in which an organisation exists can be described in terms of the opportunities

and threats operating in the external environment, apart from the strength and weakness existing in the internal environment. Every external environment is influenced by the key

environmental factors which are divided into six major categories: political economic, socio-

cultural, technological, ecological and legal factor, all these environmental factors are termed as (PESTEL) analysis. Whereas, situation analysis involves of the strength and weakness,

opportunities and threats in order to understand the interrelationships and interdependence of the functional areas of businesses.

It is useful to view the environment in a way that scanning as a concept can be applied. Fahey

and Naxayane (1986) identified three levels of environment for scanning as follow: general environment, industry environment and competitor environment. The general environment can

be described as external environment of organisation as already mentioned above with six main

factors affecting the environment. Although, organisations cannot directly control these factors


27

but they can apply appropriate strategies to minimise their effects (Hitt, Hoskisson& Ireland,

2001).

The industry environment is a set of factors that constitute the threat of entrants, suppliers, buyers, product substitute and the intensity of rivalry among competitors that directly influence a

company and its competitive actions and responses. The interaction among these five factors determines an industry’s profit potentials (David, 2001).The competitive environment focuses on

each company against whom an organisation is directly competing with in the environment. In

this environment, competitor intelligence is a major issue that raises information about competitor’s objectives, strategies, assumption and compatibilities.

Environmental scanning can be defined according to Albright (2004) as the articulation of internal

communication of external information in respect of issues that may potentially influence an organisation’s decision making process. In this regard, environmental scanning is mainly

concerned with identification of emerging issues in business environment that may affect an organisational operations or activities in the present and future. Scanning is searching for

information in order to actualize effective and efficient decision making. More so that successful management of organisation applies strategy depends upon the ability of management to adapt

to rapidly changing environmental factors.

Furthermore, Aguilar (1967) identified four types of scanning, despite there are number of ways to conceptualise scanning, these are: (i) undirected viewing – this consists of reading a variety of

publications for no specific purpose rather than to be informed; (ii) conditioned viewing – this is

reacting or responding to information in terms of assessing its relevance to the organisation; (iii) informal searching – this is actively seeking specific information in a relatively unstructured way;

and (iv) formal searching – this is actively organised technique for obtaining information for specific purpose. Bouncher (1984) reduced Aguilar’s four scanning types into two as either

passive or active. Meanwhile passive scanning connotes unintentional (un -deliberated) seeking

for information and as such organisation do not use the information for planning, and active scanning is defined as a desperately focused attention on all information resources that available

in total environment that organisation exists.

Scanning was described by Fasheun, King, &Navaganan (1981) according to their typological views, such as irregular, periodic, and continuous. Irregular scanning is occasional occurrence

method normally used on an adhoc basis, particularly when organisation needs information for planning. Periodic scanning is used on timely basis, the scanning takes place on organisational

schedule or organised time table for gathering information and necessary update, while continuous scanning is dynamic and active scanning mode of data collection on a regular basis

for strategic planning of the organisation.

Figure 1: Environmental Scanning Framework Source: A conceptual Framework for Environmental Scanning. Choo (2001).

Organisational Strategies Situational

Information Needs Information Seeking

Information Use

Managerial Traits


28

According to Choo (2001), environmental scanning framework was developed in a research he

conducted, summary of the finding are: situational dimension-this indicates nature of the environment and if environment is uncertainty, it means there is complicity and dynamism, and

as such manager tends to scan more; organisational strategy-this indicates level of correlation between the organisation’s overall strategy and scope of scanning activities, and such scanning

results must provide information and information processing needed to develop appropriate

strategy, information needs-this is mainly focused on environmental scanning particularly various environmental sectors in the industry – customers, competitors, suppliers, technology, social,

political, economic factors. Furthermore, Information Seeking-this is state of given preference to sources of information,

since organisation has a wide range of sources, as organisation scanning methods depend on

mode of scanning, size dependence and perception of the environment, experience with scanning and planning consideration in the industry, information use-this is strategic planning stage

through the information seeking from scanning and it is increasingly being used to drive the strategic planning process. Research suggests that effective scanning and planning is linked to

improve organisational learning and performance, managerial trait-this is capacity and ability to be able to convert or utilize the information collected through scanning into better

strategies. It is suggested that top managers seem to scan more than line managers due to

cognitive traits on scanning.

Figure 2: Component of Environment Scanning

Socio-cultural Economic

Supplier Substitute

Buyer

Rival firms New Entrants

Global Technological

Source: Thompson, Stricssland and Gamble (2016). In essence, environmental scanning is an analysis carried out to study the organisation as a sub-

system operating in a distinct environment constituting of socio-cultural, economic, political components which enables the organisation to identify the environmental factors that the

organisation can influence and the constraints which cannot control

In the investigation of Onodugo and Ewurum (2013) findings indicate that environment scanning is critical and highly essential in the development of businesses as well as their survival and

growth. Knowledge of environmental scanning is of high importance in the business

management, Hitt, et al (2001) posit that a better understanding of the differences in the environment would facilitate easier identification of underlying problems and designing the

required solutions to them.

Company Products/Services

Political

Demographic


29

A research work titled the relationship of organisational strategy and environmental scanning n

the food service industry United States by West (2009) showed that employing organisational strategy and environmental scanning substantially influenced organisational returns on assets

and sales. Furthermore, there are justifications that high-performing organisations in both differentiation and low cost strategies engaged significantly in environmental scanning than low-

performing ones in the two strategic classifications. Fahey and Naxayana (1986) investigation

revealed that it is three levels that an organisation can carry out environmental scanning are general environment, industry environment and competitor environment.

In the comparative analysis of study by Newgren, Rasher and La Roe (2014) in the United States

of American corporations, findings showed that firms practising environmental scanning are significantly performed better than firms who are not practising environmental scanning. More so

that average annual performance of the environmental scanning firms were more consistently than non- scanning firms for the same period, and as such the study concluded that

environmental scanning has positive impact on the market size and corporate performance.

2.2 Customer Value In the business organisations, there are diverse kinds of customer values with kinds of

characteristics. Thus diversity in the characteristic nature of business organisations made Hamel

and Prahald (1990), to specifically mention customer value as the core competence among three basic characteristics that producing access to a wide variety of markets, contributing to the end

product benefits, and being difficult for the competitors to imitate.

Therefore, customer value is first and foremost significant contribution to the core competence of the organisation, apart from competitor differentiation and extendibility characteristics. Customer

value is defined in two ways – as “desired values and perceived” (Frantisek &Iveta, 2015), desired values simply refer to specific need of a customer or what customer needs in a product

or service while perceived values are the total benefits derived from a product or service after

purchase or patronage respectively.

Kotler and Keller (2016) defined customer value in the context of customer perceived value (CPV)

as the difference between what a customer derives or benefits from a product or service, and

what are the costs of an offering to the customer and other perceived alternatives. Thus, CPV is based on difference between benefits the customer gets and cost, he or she assumes for

different choices. Customer value is difference between the prospective customer’s evaluation of all inclusive-benefits and the costs of an offering a particular product or service.

This implies that firm can increase the value of the offering by raising economic, functional or

emotional benefits and reducing costs. Schiffman and Kanuk (2004) defined customer value as the ratio between the customer perceived benefits (economic, functional and psychological) and

the resources (monetary, time, effort psychological) used to obtain those benefits. Also, customers can form values expected from products and services, and as such they decide to

purchase or patronise good and service based on their perception of the product's benefit less

the total costs incurred (Gravens& Piercy, 2003). Consumer chooses offerings that perceives to deliver most value in terms of the sum of the tangible and intangible benefits and costs. In this

respect, Kotler and Keller (2016) emphasised that value is a central marketing concept and primarily made up of combination of quality, service, and price (QSP), called the customer value

triad. Furthermore, they established that value perceptions increase with quality and service but

decrease with price.

Customer value is defined as basic characteristics that make a customer patronise a product or service, in this respect, customer value is often defined as a result of price matching and quality

evaluation in respect of product or service to be acquired. More so, that customer value can be described as a careful balancing exchange between the product or service’s utilities and the cost,

since customer value is a perception of benefits’ expectation to be derived from consumption or


30

use of a product and service and those benefits’ expectation can be dimensionally viewed in

terms of economical, functional, and psychological factors. In essence, customer value is defined as all activities that trade off benefits against the cost involved in the acquiring a product or

services, despite bundle of benefits includes – product and its perceived image, supporting services with the personnel involved in the purchase, whereas, costs include – the tagged price

of purchase, other resources such as time energy and logistics involved psychic costs like risk of

purchasing product.

A study of assessing the effect of quality, value, and customer satisfaction on consumer

behavioural intention in service environment by Cronin, Brady and Hult (2000) indicated that

value leads to satisfaction, and more importantly values are considered to have significant direct path with the product or service development. Value has been found to have great effect on

customers’ behaviour outcomes. Macheck and Macheck (2013) carried out a research that revealed bank regulators are focusing on local banking markets often achieved better

performance than state banking market, because real values of people or customers are in local

business environment. This influences initial stages of an important structural change at the state level and as such survival of an organisation depends on competitive business environment,

particularly as organisation must operate in conditions of performance. More so that approaches of business performance are majorly determined by customer values as perceived in the context

of various valences. These are differentiated according to the importance given at point of driving motives as well as the information needs of different demands in the modern method which are

validated by using practical relevance exercised over time.

Parasuranman, Zeithaml, and Berry (2000) mentioned a research work that service quality is a form of attitude that results from the comparison of expectation with performance. Individual

wishes and expectations with regard to the value of the product/service can be measured by

some of the following elements: associates, sales persons, reasonable price, high quality, and aassured guarantee period (Raab&Ajami, 2008). Customer satisfaction and perception of service

quality are decisive elements of customer values which potentially bring about high market share and higher financial performance (Raab&Ajami, 2008). Customer values are regarded as the core

attraction of the customers and comparison of performance expectations and evaluations as a

meeting of customer expectation (Jamal &Naser, 2003). Oseyomon and Gbandi (2014) conducted a research titled market orientation and profitability of quoted companies in Nigeria, The study

revealed that a mean index score of 2.3 measured against a scale of 5, this implies that the extent of customer satisfaction was quite below the average, indicating that customers

established different values of their market orientation which enhancing patronage and overall

profitability.

2.3. Environmental Scanning and Customer Values

Empirically literature silent on relationship between environmental scanning and customer values, however their associations can be periscope from each variable and other variables which

had been used to explain certain situations, such as Bayode and Adebola (2012) conducted

investigation on strategic environment scanning and market size in a competitive business environment in Nigeria. Findings showed that organisational management gives great concerns to

environmental scanning, thereby facilitating positive increase in market size, it revealed that environmental scanning is mainly concerned with identification of emerging issues in business

world that may affect an organisation now or later. Coasta (1997) examined strategic planning

and environment scanning in the multi-unit Portuguese hotel industry. It was discovered from the findings that lack of environmental scanning either by formal and informal account for poor

performance in the hotel industry. Environmental scanning revealed individual perception as it is related to the organisational product or service development and its operations.

Jones, Brown, Zoltners and Weiz (2013) carried out a study titled the changing environment of selling and sales management on organisational performance. Findings showed that new

development and trends in selling and sales management are creating demands and


31

opportunities which require adaptation of customers’ values and new approaches on the part of

sales performance of the organisation. Furthermore, customer values are more critical factors of change in the business environment that enhance the practice of selling and sales performance.

Tripathi (2014) carried out investigation that revealed value and value –related characteristics have a modest effect on customer satisfaction. Furthermore, research found out that individual’s

need moderates the relationship between value of product or service and customer satisfaction.

More so that the research also pointed out that where high value of product or service is sufficiently paraded, there will be impact of having continuous patronage. It is against the back

ground that researchers hypothesized that environmental scanning cannot be used to discover customer values, needs and demand.

2.4 Business Performance

Business performance is defined as activities which indicate successful outcomes of business ventures according to Ikotun (2017), thereby making business performance to be the function of

environment where business organization exists. Frolick, Thilini and Aryachandra (2012) asserted

that business performance entails the combination of management and analytical processes that allows management of an organization to achieve pre-determined goals. Organizational

performance is assessed in term of the results that an organization achieve in relation to its objectives and principle which can be measured through input – output levels. Business

performance of organization is all about focusing on all organization functions at high level and

low levels activity to ensure they are adequately performing as expected (Mann &Kehje, 2009).

2.5 Theoretical Foundation

A discussion on environmental scanning and customer values in commercial banks require

theoretical explanations which have been established among scholar in the field of social and management sciences. The theoretical background of the discussion is anchored on theories of

Dynamic Capability and Rationality as related to the two variables, also efforts are made to point out the link between environmental scanning and customer values as driver platform from the

theories.

Dynamic Capability Theory (DCT) The DCT was postulated by Teece and Pisano in 1994 as knowledge frontier of resource based

view theory [RBVT]. DCT is mainly focused on the organization’s ability to integrate, build and

reconfigure internal and external competencies to address rapidly changing environment. Dynamic capabilities, thus reflect an organization’s ability to achieve new and innovative forms of

competitive advantage given path depended and marked positions. DCT is the suitable to explain environmental scanning operations being in tandem with the firm’s ability to exploit internal and

external changing environment to be able to have competitive hedge, achieve organizational goals and remain in business.

More importantly that building organizational capability, stakeholder perceptions and marked

orientations are vital indications that organization has to build. Its capacity in order to exploit current resources, capability exploitation and engage in capability exploitation, and engage in

capability building [Ahexlkora&Ajei, 2012]. Market orientation, knowledge management and

customer relationship management are the three important aspects of organizational capabilities needed mostly for the creation of superior customer value. Furthermore, they identified activities

which forms dynamic capabilities sensing seizing and transforming are process of achieving either environmental scanning or customer satisfaction.

Sensing is conceived as the act of discovering opportunities, conducting marketing research and

obtaining information from customers regarding what they need as well as determine other elements of the business environment other elements of the business environment that

favourable to the organization, Seizing focuses on taking advantage of opportunities for value

creation and competitive advantage through acquiring assets and human resources for effective and dynamic achievement of set goals, while transformation is the process of changing


32

organizational activities as the dynamic environment dictates to suit the taste of time particularly

as the adjustment or restructuring of the controllable business environment to face challenges and to enhance market performance as stipulated by dynamic capability theory.

Theory of Rationality

The theory posits that complex social phenomena can be explained in terms of basic individual actions, more so that social institutions and social changes are developed as a result of the action

and reaction of individual [Elster, 2010]. Therefore, rationality in the context of the theory assumed position of rational beings as well as economic man that must be motivated by desires,

needs, wants and goals which ultimately express their preferences, since resources are not

evenly distributed or equaled. Rational choice theory holds that individual must anticipate the alternative course of action and preferred option. Health [1976] mentioned that rational

individual choose the alternative that is likely offer them greatest satisfaction.

Rational choice theory view social interaction as social exchange that is modeled as economic action. More importantly that people are motivated by the rewards and cost of actions as well as

profit making. The implication of this theory is that organizational performance depend mainly on how the management sets objectives, missions, and goals of achieving customer satisfaction and

modality of detecting customers’ need and demands. Customers need continuous motivation by

organization in order to have the required service or product and to avoid patronage dissonance, perhaps there is services failure or performance below expectation, organizations shall try to

adjust by minimizing their service expectation to align with actual performance. This position justified on the ground that the principle of rationale choice and social exchange which are simply

expression of the basic principle of behavioral psychology. In this case a rationality must rest upon a balance of mutual rewarding system that is organization must provide required products

and services to the customers if customer satisfaction must be addressed in a fairness manners.

3.0 Methodology The study adopted descriptive research design of cross-sectional survey with quantitative

approach in nature. The population of study mainly focused on three selected money deposit

banks with namely, First Bank PLC, First City Monument Bank and Skye Bank (now Polaris bank)with an estimated customers’ population of 70,380 and sample size of 1,489 was derived

using Watson [2001] technique as cited in the Afolabi (2014). In order to avoid compromising error of non-response from some respondents and inappropriate filling of research instruments,

therefore, sample size was increased by thirty percent [30%] to have the one thousand, four

hundred and ninety [1490] according to Asika (1999). Multistage sampling technique was used with structured questionnaire of a six point modified Likert scale. Respond rate of 95.64% -

(1,425) was achieved for the study. To determine the validity of the instrument, content validity was carried out through the expertise of the senior academics in the field of study. However, the

construct validity of all variables involved in the study was ascertained using Kaiser-Meyer-Oklin and Bartlett’s tests. The reliability of the research instrumenthad index range of between 0.76

and 0.83 using Cronbach Alpha Coefficient. The data were analyzed using Pearson’s product

moment correlation [PPMC], through software application of IBM SPSS statistics version 22 test hypotheses.


33

Research Model

The study is guided by this model that was developed in tandem with the study objective, research questions and hypotheses in the study scope.

Ho1

Ho2

Source: Researcher’s conceptual Model

Conceptualization of variable Identification and operationalization.

y = F [X] …………… Equation [i] Where y = Dependent Variable = Customer Values [CV]

x = Independent Variable = Environmental Scanning [ES] y = a+b+bx+u ………….. [ii]

a = Intercept

b = Slope of the regression line u = Marginal Error or Error term

By functional econometric we can have simple regression equation [ii] as rally point of evaluation this study.

Model specification

Thus equation ii is presented as follows: CV = a + b [ES] + u It is our expectation that some units of customer values at zero level unit will account for the

element units of environmental scanning. We also expect the elements of customer values to

have correlation either positively or negatively with environmental scanning. Therefore, a prior expectation is a > o, b > o.

Model Estimation

It is equally important to mention that we estimated our model for numerical values of model parameters and as such use employed the ordinary least squares [OLS] technique using a

computer software programme statistical package for social scientist [SPSS]. Further data analysis shall be presented within subsequent sections of this study.

4.0 Findings and Discussion

The main objective of the study was to examine the effect of environmental scanning on

customer value of the selected deposit money banks. As such the study required the respondents to indicate the extent of their agreement with statements relating to environmental scanning and

customer value on a scale of 1-6, where 1= Strongly Disagree, 2= Disagree, 3= Fairly Disagree, 4= Fairly Agree, 5= Agree and 6= Strongly Agree.

Hypotheses were also tested using the simple regression analysis. The data for environmental

scanning and customer values were created by summing responses of all items for each of the variable. The results of the regression are presented in Tables 1.

Independent Variable

Environmental Scanning

(SC) Customer Values (CV)

Dependent Variable


34

Table 1: Summary of Simple Regression Analysis for Effect of Environmental Scanning

on Customers’ Value (N= 1344)

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

T Sig.

B Std. Error

Beta

1 (Constant) 18.264 1.261 14.481 .000

Environmental Scanning

.945 .040 .544 23.724 .000

R = .544, R2 = .295; F(1,1342) = 562.834, p<0.05

Dependent Variable: Customer Value Source: Field Survey Result, 2018

Table 1 presents the results of the linear regression analysis generated on the effect of environmental scanning on customer values of the selected deposit money banks in Nigeria. The

results as displayed on Table 1 shows that environmental scanning has a significant positive

influence on customer values of the selected deposit money banks in Nigeria (β = .945, t= 23.724, p<0.05). Also, Table 1 indicated that a positive and moderate relationship between

environmental scanning and customer values (r = .544, p<0.05). This relationship was statistically significant at p=0.000 which less than the level of significance 0.05 adopted for the

study. The result of this analysis is consistent with the apriori expectation of positive effect of

environmental scanning on the customer values. The t-value of 23.724 and p-value of 0.000, implies that the coefficient of the environmental scanning is statistically significant at p<0.05.

The result is confirmed by F-statistics of 62.834 and p-values of 0.000 which is less than the significance level of 0.05 adopted for the study, this suggests that environmental scanning

statistically and significantly predicts the customer values. Furthermore, the result indicates that

environmental scanning are responsible for 29.5% variance in customer values. The fitted model used to explain the effect of environmental scanning on the customer values is therefore

summarized in equation 1. y2 = 18.264 + .945ES________________Equation (1)

Where: y2 = Customers Value (CV) ES = Environmental Scanning

The regression equation formulated shows that taking all factors constant at zero, the customer

values of the selected deposit money banks in Nigeria was 18.264. The results also showed that taking all other independent variables at zero, a unit increase in environmental scanning would

lead to a 0.945 increase in customer values of the selected deposit money banks in Nigeria. The results indicated a positive effect of environmental scanning on customer values of the selected

deposit money banks in Nigeria. The result reveals that deposits money banks in Nigeria are

operating to the specific financial needs of the society according to its dictates. Therefore, the null hypothesis (H02) which states that environmental scanning do not have influence on

customer values is hereby rejected. Also, the null hypothesis (H01) which states that environmental scanning do not have relationship with customer values is hereby rejected.

DISCUSSION OF FINDINGS

The result of findings indicated a positive and significant relationship between environmental scanning and customer values, and that environmental scanning has a significant positive

influence on customer values of selected commercial banks in Lagos State Nigeria, as the

hypotheses favourably confirmed. The result is consistent with the finding of Hitt, Hoskisson and Ireland (2001) that conducting investigation for proper understanding of business environment

facilitates easier identification of underlying problems and needs with immediate designing required solutions. The result also aligned with Bayonde and Adebola (2012) that environmental

scanning facilitates positive increase in size of market based on study carried out to examine


35

strategic environment scanning and size of the market in a competitive business environment in

Nigeria.

By implication, environmental scanning is veritable means of discovering fundamental needs in order to create satisfaction, therefore, organisational management must offer environmental

scanning preference attention. Newgreen, Rasher and LaRoe (2014) established that organisation firms practising environmental scanning significantly performed better than organisations whoare

not practicing environmental scanning based on investigation conducted in the United States America (USA) corporations. It is important to note than environmental scanning showcases

adequate understanding of target market’s needs, wants, and demands. More importantly that

needs are basic human requirements, these become wants when they are directed to specific objects that might satisfy the need, and demands are wants for specific products or services

backed by an ability to pay (Kotler& Keller, 2016).

It is in this respect that finding is particularly gauged as relevance of environmental scanning as well as central to increasing productive agenda of organisations, through products or services

creation and their offers. In fact, this is the most critical opportunity for ensuring the active productivity of organisations on the growth process as well as in the sharing congruent goals or

benefits generated by organisation firms. The failure of organisations to meet this critical

requirement implies that there is dissatisfaction with the organisational products or services which should be based on customer values. Therefore, if commercial banks are not practicing

environmental scanning in a way that appeals to customers’ values, there can be paradigm shift of patronages to other banks which offer customers their required products or services based on

customers fundamental needs, as originated from conceptualization of environmental scanning provisions. It is apparent that maximizing customer value means cultivating long term customer

relationship (Kotler& Keller, 2016).

Contextualized Issues and Business Performance

It is evident from research results that environmental scanning and customer values are essential and critical to the business performance. Therefore, business performance is parameter that has

its measurement in three main activities such as selection of goals, consolidation of measurement information relevant to the organization’s achievement of these goals, and intervention made by

the mangers in the light of the information (Mann &Kehje, 2009), no doubt all these information gathering processes are function of environmental scanning. Business performance looks at all

business processes which focus on aligning the strategic and operational objectives of the

company in order to achieve better performance by ensuring the set organizational goals and objectives are met timely.

The essence of strategic business performance measurement is to handle critical factors such as:

(i) evaluate values that the enterprise expects from its stakeholders and value that each group of stakeholders expect from the organization which can be done, (ii) monitoring process efficiency,

(iii) defining the standards of minimal level of performance and level of target performance, (iv) Focusing on performance drivers and the factors of current profitability (v) Suggesting measures

for improving finances performance (Atkinson, Waterhouse & Well 2009). The business

managements are always responsible to develop rational process that is responsible to determine the key performance measure of the company, some of the notable indicators used in measuring

business performance are profitability, return an investment (ROI), return on equity (ROE), customer value, customer patronage and satisfaction, market share and organization’s size, some

of these are sub-variables identified as indicators of business performance in line with the research objectives.

5. Conclusion and Recommendations Business organisations believe that customers are the only true profit centre (Kotler& Keller,

2004), besides, marketing is the art and science of attracting and keeping profitable customers, indicating that management at every level must be involved in knowing, meeting, and serving


36

customers. Also, customers are becoming more difficult to please, therefore, rationale to capture

their values are inevitable as these give specific direction and modality of creating customer satisfaction. No doubt, this is main purpose of environmental scanning, and it has been

empirically established that there is positive and significant relationship between environmental scanning and customer values, as well as positive and significant influence environmental

scanning on customer values which can be achieved through products or services creation and its

development with adequate consideration of other marketing mix variables.

The recognition of an effective environmental scanning system as a key element of a customer

values’ identifier suggest that it is serious strategy for having hedge over competitors or better

offers. Markets are heterogeneous and dynamic in Nigerian society, particularly in the banking industry, thereby making customer values to be at variance, and it is environmental scanning

system that can be used to determine what customers’ needs, desires, and demands. More importantly, customer perceived value is thus based on the difference between what the

customer gets as benefits and assumes costs that is what customer gives for different possible

choices. Ikotun (2018) stated that customer values are identified by means of environmental scanning such as research development that discovers innovative product and service

development for customer satisfaction and market performance. The policy implication of this study is that banks should endeavour to engage in environmental scanning in order to unearth

the hidden opportunitiesso as to promote the customer values. Further studies can expand the frontiers of this study in other locations as well as other banks.

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Saddle River, NJ07458. Tripathi, M.N. (2014). Customer satisfaction and engagement: Customer retention for brand

manager. The XIMB Journal of Management, 11(1), 123-134. Watson, J. (2001). How to determine a sample size: Tip sheet Number 60, University Park, PA:

Perm State Cooperative Extension. Retrieved on 11/11/2013 from

http://www.extension.psu.edu/evaluation/pdf/T60.pdf.


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INFLUENCE OF CELEBRITY ENDORSEMENT ON CONSUMER PATRONAGE OF SOFT

DRINKS: A STUDY OF PEPSI ‘LONG THROAT’ BOTTLE ADVERTISEMENT ADEWALE, Ganiu Adegbite*

Ogun State Institute of Technology, Igbesa, Ogun State, Nigeria [email protected]

HAMEED, Oyelaja Gbadamosi**

Ogun State Institute of Technology, Igbesa, Ogun State,Nigeria.

[email protected] +234 (0)8070613638* +234 (0)803 231 2808**+234 (0)8134885241***

Muhammed MOSHOOD

Crestal Consults, Abeokuta Ogun State Email: [email protected]

Abstract Beyond the major factors that influence decision to buy a product or service, celebrity endorsement has become a major marketing tool especially in clustered media environment. It is on this basis that this study examined the influence of celebrity endorsement on consumer patronage of soft drinks, with particular interest in the Pepsi ‘Long Throat’ bottle campaign. This study adopted survey research design. The population of this study comprised of mainly consumers of Pepsi soft drink within Abeokuta Metropolis. Out of the One hundred and twenty (120) copies of questionnaire distributed, 115 copies were duly filled and retuned, which represents 96% of response rate. The findings of the study show that celebrity endorsement is an effective advertising strategy; the Pepsi ‘Long Throat’, asides having additional content was patronized more by the usage of celebrity endorsement while many of the consumers were attracted more by Tiwa Savage, the Mavins First lady (former), as she is widely called to patronize the product (soft drink). The paper concludes that though, it is relatively costly to get celebrities to serve as product ambassadors but it is worthwhile investment once done. It was however recommended that Pepsi should use celebrities from other genres of music as well as other aspects of entertainment other than hip hop and R n B. This, it is believed, will capture others segments of entertainment lovers. Also, teen and young celebrities like Ozzybosco, Emanuella among others should be used as brand ambassadors to win the very young to their side.

Keywords: Advertising, Celebrity, Celebrity Endorsement, Marketing, Long Throat.

Introduction

In getting goods, services or ideas sold in this competitive world, more has to be done so as to be able to get hold of the larger share of the market. In doing this, advertising has become one

of the most important commercial activities in this regard. Companies and business ventures

spend a large amount to produce and run advertisements and commercials in a bid to promote and communicate information about their companies and their products. With this done, there is

expectation that the product so advertised would be patronized, owing to the enormous influence of advertisements which are known for their persuasive and mind-bending messages and

communications.

Of all marketing weapons, advertising is widely known for its long lasting impact on audience’s mind (Okunnu and Igebu, 2015). It must be further noted that advertising is a subset of the

promotional marketing mix – product, price, place and promotion.

Having realized the important of advertising, which first aims at selling and secondary intent is to differentiate product from those of the competitors, Sonya and Brumbaugh (2002) opine that

advertisers have long accepted the idea that “beauty sells” and utilized attractive celebrity

endorsement, spokes persons and models in their adverts. This without doubt increases



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advertisers’ believability, willingness to purchase on the part of the consumers and favourable

attitude towards the product and actual purchase.

Personality advertising is the use of a celebrity or an expert in a particular field to endorse a product or service as a way of promoting it without necessarily basing it on his personal

experience. Celebrities are people who enjoy public recognitions by a large share of a certain group of people. The term “Celebrity means a famous person (Oxford Advanced Learner’s

Dictionary) while Okunnu and Igebu (2015) refer to celebrity as someone who is well known to the general populace. This person could be an individual who is known to the public. Actor,

athlete, entertainer, etc fall in this category.

Endorsement is a channel of brand communication in which a celebrity acts as the brand’s spokesperson and certifies the brand’s claim and position by entrenching his/her personally,

popularity, and status in the society or expertise in the field to the brand (Khatri, 2006). In

assessing the huge sum spent on celebrity endorsement, Katyal (2007) posits that marketers spend enormous amount of money annually on celebrity endorsement contracts based on the

belief that celebrities are effective spokespersons for their products or brands. McCracken (1989) says when celebrities are used or depicted in marketing communications; they bring their own

culturally related meanings, thereto, irrespective of the required promotional role.

According to Belch and Belch (2009), when an organization decides to use a celebrity strategy, there are three important sources (factors) that need to be considered. These are source

credibility, source attractiveness and source power. It is believed that marketers and advertising agencies rely on persons with traits that can stimulate patronage of advertised brand. The

celebrity, otherwise known as the ‘source’ may be knowledgeable, popular and or possess

physical attractiveness, characterizing the target audience or have the power to reward or punish the receiver in some manner.

Personality advertising or celebrity endorsement appeal has been an integral element of

organizations’ marketing strategy, with benefits. Also, celebrity endorsement is increasingly being employed across various industries regardless of product type. It is known to playing the role of a

signaling strategy, says Mustafa (2005) in Vipul (2011). Reynolds (2000) believes celebrity endorsement can give a brand a touch of glamour. With all these said, this study thus examines

the influence of celebrity endorsement on consumer patronage on soft drinks, with particular

interest in the Pepsi ‘Long Throat’ bottle campaign.

Statement of the Problem

Brands all over the world use celebrities to sell their products. Of course, brand influencers are

not the only determinants of product purchase. There are many factors that influence consumer’s patronage of a particular brand. Some of these factors include brand reputation, (with

consideration for name, quality) and price especially when products are of daily usage. Another factor enunciated by the authors is celebrity endorsement. Nathaniel and Michael (2006) are of

the view that celebrity endorsement in advertising is not a new phenomenon; it has become

much more widely spread over the past twenty years.

Choi and Riffon (2007) support the position of the duo of Nathaniel and Michael, as regards

celebrity endorsement not being a new phenomenon as well as being a popular marketing

strategy. They (Choi and Riffon, 2007) further posit that the popularity of celebrity endorsement can be attributed to the numerous benefits companies have seen by utilizing this form of

advertisement.

Moreso, today’s media-clustered environment where it is difficult to grab consumer’s attention, marketing managers are looking for celebrities to gather attention. Hence, this study evaluates

how well celebrity endorsement has become a great influence on consumer’s patronage. The study examines how the use of celebrities in advertisements of Pepsi ‘Long Throat’ Bottle was

instrumental to the consumer patronage of the product. Here lies the problem of the study.


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Research Objectives

The objectives of the study are as follow: 1. To ascertain the influence of celebrity endorsement on consumer patronage for Pepsi ‘Long

Throat’. 2. To examine the extent to which celebrity endorsement influenced consumer’s patronage for

Pepsi ‘Long Throat’.

3. To find out if celebrity endorsement is an effective advertising strategy.

Research Questions 1. Did celebrity endorsement influence consumer’s patronage of Pepsi ‘Long Throat’?

2. To what extent did celebrity endorsement influence consumer’s patronage of Pepsi ‘Long Throat’?

3. Is celebrity endorsement an effective strategy?

LITERATURE REVIEW Use of Celebrity in Advertising

The image celebrities project to consumers can be as important as their ability to attract

attention. While brand marketers with years of experiences tend to believe that celebrity endorsements work and some would disagree, one would be sure that the magnitude of its

impact is difficult to measure even if sales figure are at our disposal. An interesting perspective on celebrity endorsement and how they impact on consumers was developed by McCracken

(1989). According to this model, a celebrity’s effectiveness as an endorser depends on the

culturally acquired meaning he or she brings to the endorsement process. Each celebrity’s image contains many meanings –status, class, gender and age as well as personality and lifestyle. In

the study of thousands of media commercials, especially TV commercials that are viewed in the US, Europe and Africa, it was mentioned that the most viewed adverts or in other words which

enjoyed most view and captured viewers’ attention had the following characteristics: 1. Humour: Humour in adverts increases viewer’s enjoyment and involvement.

2. Music: Music is an important element in more than 50 percent of adverts that are

categorized as watchable. 3. Celebrities: It was found that celebrities are excellent in terms of attention getters, as they

attract both male and female in addition to different age groups. In recent time, marketers in Nigeria have made increasing use of celebrities in their advertisement. More and more brand,

whether product or services are banking on the mass appeal of celebrities. As soon as new

faces ascend popularity charts, marketers queue up to have them endorse their products or services.

Celebrity Endorsement: An Overview

Celebrity endorsements are an omnipresent feature of the present day marketing. The modern corporation invests a significant amount of money to align itself with the big name celebrities

with the belief that they will aid their success in market place which they operate in.

Marketers usually use individuals who have achieved some form of celebrity status to serve as spokesperson for their companies. Most of the celebrities hired by companies to pitch their

products or service are popular people, movie stars, entertainers, athletes or pop-stars. Occasionally, a politician or some well-known public figure may be used (Belch and Belch, 2001).

Furthermore, when a company decides upon using an endorsement strategy as the marketing

communication tool, the main focus lies in exposing their brand (Kotler, Armstrong, Saunders and Wong, 2001).

Riezebos (2003) says a product is usually given a new brand name that is unique for that product

alone in an endorsement strategy. Besides the unique brand name, they also get provided with the name of an endorser, who is the celebrity. The endorsement serves as approval or support

that can be seen as a guarantee of recommendation for consumers.


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It is only advisable to use endorsers for brands if there is high level of brand-added values. This

means that the name of the endorser should be clearly visible next to the name of the branded article (Riezebos, 2003).

Belch and Belch (2001) assert that companies have jointly been using their brands and celebrity

endorsers in the hope that celebrities may boost effectiveness of the marketing attempts in the long-term. Though, a company is trying to send various types of information to their target

audience. As such, to be able to develop an effective advertising and promotional campaign, a

company has to select appropriate endorser to different channels or media (Till and Shimp, 1998). This presupposes that different endorsers or celebrities may be needed by a brand in a

bid to effectively reach their target audience using the available channels.

Factors Determining Effectiveness of Celebrity Endorsement Since the essence of celebrity endorsement is to penetrate into more market while improving the

organization’s profit in the process, it is important that some values must be inherent in celebrities that would be used for commercial purposes. This is because celebrities on their own

draw attention to an advertising message or campaign. This view is supported by Pringle (2004) who noted that a company which seeks to use celebrity endorsement strategy would have to

carefully select a celebrity who has a good fit with the brand which is intended to be exposed.

Belch and Belch (2001), Till and Shimp (1998) and Ohanian (1990) cited in Dimed and Joulyana

(2005) opine that some factors must be put with consideration before a celebrity is used for a marketing purpose. The factors are:

i. Source credibility ii. Source attractiveness

iii. Source power

Source Credibility Credibility is the extent to which the receiver sees the source and having relevant knowledge,

skills, experience and trust to give unbiased and objective information. Source credibility is used

to imply a communicator’s positive characteristics that will affect the receiver’s acceptance of a message (Ohanian, 1990). Basically, one can say that the communicator, otherwise known as the

celebrity can be seen as a knowledgeable person with expertise. Furthermore, the source needs to be trustworthy, in the sense of honesty, ethics, and believability (Belch and Belch, 2007).

These are the two attributes that a celebrity is expected to have to be a successful endorser in an advertising campaign. These characteristics are further presented, more in-depthly below:

(a) Expertise: Belch and Belch (2001) note that a spokesperson endorsers is more important

in explaining purchase intentions rather than their attractiveness and worthiness. The authors also argued that celebrity endorsers are more effective when they are

knowledgeable, experienced and qualified or talk about the product being offered for sale. (b) Trustworthiness: In relation to expertise factor, a celebrity needs to be trustworthy

when endorsing a product or service (Schiffman and Kanuk, 2004). This is based on how

honest the celebrity is about what he/she says that the target audience must find the source (celebrity) believable. Moreso, Ohanian (1990) states that when a celebrity in

perceived more trustworthy, the message will be more effective and the receiver will be more interested. Hence, trustworthiness is the degree of confidence in the communicator’s

intention to communicate the assertions he/she considers being the most valid. Belch and Belch (2001) further posited that when the information from a credible source

influences the beliefs, opinions and attitudes of a receiver, the latter mentioned adopts the

opinion of the credible communicator. This is based on the assumption that the information from the source is accurate. If the celebrity is able to spark interest of the receiver with the

information that he/she meant to send, the company will in the long run gain a loyal consumer.


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Source Attractiveness

Source attractiveness affects the receiver in the sense that they identify themselves with celebrity. This does also motivate the receiver to seek some type of relationship with the source

and this adopts similar beliefs, attitudes, preferences or behaviours. Furthermore, if a celebrity changes position, the receiver might follow and adapts to these changes (Belch and Belch, 2001

and Ohanian, 1990). If this happens, the celebrity has fulfilled its functions. However, not many

celebrities achieve this, but as mentioned earlier, the main purpose of source attractiveness is to make a consumer feel a part of the celebrity as well as the company and brand. This is more

related to physical attributes, such as similarity, familiarity and like ability. As Ohanian (Op cit) pointed, these are important in the individual’s initial judgment of another person. Similarity in

the words of Belch and Belch (2001) is a supposed resemblance between the source and the

receiver of the message while familiarity refers to the knowledge of the source through exposure. Liability is affection for the source as a result of physical appearance, behaviour or other personal

traits. The three attributes; similarity, familiarity and likeability are more elaborated below: (a) Similarity: Talking about similarity, Belch and Belch (2001) hint that the consumers are

more easily influenced by a message coming from someone with whom they feel a sense of similarity with.

(b) Familiarity: Belch and Belch (2001) believe that familiarity can be considered as the

level of knowledge a celebrity possesses of a brand. When a company considers choosing a celebrity for their advertising campaign, they need to analyze the previous knowledge a

celebrity has or how he/she well utilize their knowledge in exposure phase. The authors believe that this will be an attribute that the respondents will observe as too difficult to

evaluate and therefore the authors will exclude it from the research process.

Furthermore, the respondent might find it to be too diffusive. (c) Likeability: Basically, celebrities to be used for marketing purposes must be admired or

at least well known in the public eye (Belch and Belch, 2001). It must be pointed out that celebrities have to be popular in the market and have certain

characteristics that are extravagant. Moreover, the company has to find a balance to make sure

that the celebrity does not overshadow the brand itself (Ohanian, 1990).

Source Power

The source power as a characteristic is very difficult to apply in a non-personal situation such as

advertising. The reason is that a celebrity in an advertisement generally cannot apply any sanction to the receiver or determine any compliance that will actually occur (Belch and Belch,

2001). However, the source power can be beneficial in an endorsement strategy when using an individual with an authoritative personality as a product spokesperson.

Pepsi ‘Long Throat’ Campaign

Before talking about the ‘Long Throat’ Campaign, it is important to delve into a brief history of

Pepsi. Pepsi, a soft drink in Nigeria is a child brain of the Seven-Up Bottling Company Plc, one of the largest independent manufacturer and distributor of the well-known and widely consumed

brands of Soft drinks in Nigeria. Her products include Pepsi, 7up. Mirinda, Teem and Mountain Dew.

The company was founded by A Lebanese Mohammed El-Khalil, on October 1st, 1960, the first

bottle of 7up rolled out of the facility located at Ijora. In a bid to hijack the seemingly competitive market and control its large share, a hilarious advertisement, which had Tiwa Savage, Wizkid,

Seyi Shay as brand endorsers was launched to introduce a bigger size of the soft drink for the usual amount into the market. The campaign started on twitter with the hash tag #ThingsI

LongThroatFor hitting a record close to a billion impressions and as the bigger online campaign

for any brand (Akingbolu, 2016).

The creatives showed Wizkid, Tiwa Savage and Seyi Shay with a very ‘Long Throat’ which was also on the advert that followed, drowning everyone in a sea of expectation. Coming with the


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celebrity endorsement of the soft-drink is the fact that there was an increase (20%) to the size

and content of its PET to give value to customers for the same amount.

METHODOLOGY This study adopted survey in investigating the relationship between variables. The choice of

survey design was hinged on the nature of the study, which is a communication cum social research. The population of this study comprised of mainly consumers of Pepsi soft drink within

Abeokuta Metropolis. This is so because only those who drink the soft drink could probably have

the necessary idea of the use of celebrities for the study. Since there is no data for consumers of Pepsi drink in the city, the researcher pegged the sample size of the study at 120 in order to

ensure representativeness and convenience during data gathering and presentation/analysis. According to Moshood (2016), Abeokuta can be stratified into five (5) major areas namely; Egba

Ake, Owu, Oke-Ona, Gbagura and Ibara. Hence, the sample was drawn from streets across the widely known major blocks. The study adopted stratified and purposive sampling techniques in

selecting 120 respondents across the five (5) major areas in Abeokuta. This technique afforded

the researcher to sample only consumers of Pepsi in the city as it is assumed that not all the population would patronize the brand and then at that the level of adoption or patronage would

significantly vary. Questionnaire served as the study instrument and it was self administered and retrieved by the researchers across all parts of the city.

Data Analysis, Presentation and Discussion of Findings

In the analysis of the primary data, data are presented using simple percentage and tables. The

findings from the data collected were discussed based on the research question put forward in chapter one of the study. All data collected are analyzed and interpreted, using simple

percentage and tables. Among the one and twenty (120) questionnaires were distributed while 115 were duly filled and retuned, which is 96% of the total distributed questionnaires. This is

enough to give unbiased report of findings for this study.

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RESEARCH QUESTION 1: Does celebrity endorsement influence consumer’s patronage

of Pepsi ‘Long Throat’? This question sought to know the efficacy and impact of celebrity endorsement, an advertising

strategy and if it influences consumer’s patronage on ‘Long Throat’. It was answered using 1 and 2.

Table 1: Respondents’ view on the assertion that the use of celebrities for Pepsi

‘Long Throat’ campaign made them buy soft drinks

Level of Agreement Frequency Percentage (%)

Strongly Agree 56 48.7

Strongly Disagree 8 6.9

Undecided 1 0.9

Agree 43 37.4

Disagree 7 6.1

Total 115 100%

Source: Field Survey, 2019

The table above shows that 48.7% of the respondents and 6.9% strongly agreed and strongly disagreed that the use of celebrities made them buy soft drink, 0.9% stayed neutral while 37.4%

agreed, 6.1% disagreed.

Table 2: Respondents’ level of agreement on the postulation that the use of Wizkid, Tiwa Savage and Seyi Shay as celebrity endorsers made them

to buy the Pepsi ‘Long Throat’ bottle to very large extent




Undecided 2 1.7

Agree 44 38.3

Disagree 12 10.4

Total 115 100%


According to the analysis, 40% held strong agreement to the postulation, 9.6% strongly disagreed, 1.7% stayed indifferent, 38.3% agree while 10.4% disagreed.

In table 1, 48.7% of the respondents held strong agreement hint the use of celebrities for Pepsi

‘Long Throat’ made them buy soft drinks, 37.4% of the sampled respondents agreed while just 6.1% disagreed and strongly disagreed.

Table 2 shows that respondents pointed out that the use of Wizkid, Tiwa Savage and Seyi Shay

made them buy Pepsi ‘Long Throat’ Bottle, to a large extent. In the analysis, 40% of the respondents, representing 46 out of the 115 sampled held strong agreement, 38.3%, agreed,

1.7% were neutral to choice while 9.6% and 10.4% strongly disagreed respectively. From the analysis above, it shows that celebrity endorsement is capable of inducing favourable

action in direction of a particular product or serviced, perhaps or not unconnected from the

influence celebrities used had in the audience. Celebrities on a general note are known to be charismatic and influential over their followers; these people as a result of their influence have

the tendencies to make people think or do what they wish. Consequently, makers of Pepsi said one at decided to top into Seyi Shay for the ‘Long Throat’ Bottle Campaign. In summary, the use

of the celebrities influenced the consumer to buy the drink.

RESEARCH QUESTION 2: To what extent does celebrity endorsement

influence customer’s patronage of Pepsi ‘Long Throat’?


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This question sought to know the extent at which celebrities’ involvement in the ‘Long Throat’

bottle influence the buying decision of Nigerian. Hence, table 3 and 4.

Table 3: Respondents’ level of agreement on the view that celebrity endorsement has made them buy more




Undecided 5 4.3

Agree 43 37

Disagree 8 7

Total 115 100%


This table shows that 46.1% of the respondents chose “strongly agree”, 5.2% picked strongly

disagreed, 4.3% stayed neutral while 37.4% agreed and 7% disagreed.

Table 4: Respondents’ level of agreement on the postulation that the use of Wizkid, Tiwa Savage and Seyi Shay as celebrity endorsers made them

to buy the Pepsi ‘Long Throat’ bottle to very large extent




Undecided 2 1.7

Agree 44 38.3

Disagree 12 10.4

Total 115 100%


According to the analysis, 40% held strong agreement to the postulation, 9.6% strongly disagreed, 1.7% stayed indifferent, 38.3% agree while 10.4% disagreed.

According to the analysis in table 4, 46.1% of the sampled respondents did 37.4% held strong

agreement and agreed in like manner to the view that celebrity endorsement has made them buy

more, 5.2% stayed different, 5.2% held strong disagreement while 7% disagreed. Table 7 shows that 40% held strong agreement 38.3% agreed hint use of the three (3) celebrities for the Pepsi

‘Long Throat’ bottle made them buy the soft drink to a very large extent. From the above, in reference to tables 3 and 4, the use of the trio of Wizkid, Tiwa Savage and

Seyi Shay greatly influenced the purchase of the soft drink. Data from the highlighted tables clarified such. Again, this is another confirmation of the powerful influence celebrities wield over

their followers and fans alike. So, the influence they have on them would be replicated, like we

just found out in this study which led to more purchase compared to what it would have been if the celebrities were not used.

Having said these, celebrities can be referred to as “marketing idols”, as they are bound to “enchant” the fans and followers to ‘buy’ what they ‘carry’.

RESEARCH QUESTION 3: Is celebrity endorsement an effective strategy? This research question is interested in knowing if celebrity advertising/endorsement is an

effective strategy is selling product or service. To answer this question, references are made to table 7 and 8.


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Table 7: Respondents level of agreement with the notion that use of celebrities

can influence purchase of a product


Strongly Agree 62 54

Strongly Disagree 4 4

Undecided 5 4

Agree 35 30

Disagree 9 8

Total 115 100%

Source: Field Survey, 2019 From the table above, it shows that 54 of the respondents and 4% held strong agreement and

strong disagreement on the notion that use of celebrities can influence purchase, 4% stayed indifferent while 30% agree and 8% disagreed.

Table 8: Respondents level of agreement with the position that celebrity

endorsement is an effective advertising strategy


Strongly Agree 45 39

Strongly Disagree 03 3

Undecided 03 3

Agree 59 51

Disagree 5 40

Total 115 100%

Source: Field Survey, 2019 The table shows that 39% of the respondents as well as 3% strongly agreed and strongly

disagreed with the view that celebrity endorsement is an effective advertising, 3% stayed

indifferent while 51% and 4% agreed and disagreed respectively.

In table 7, 54% of the respondents held strong agreement to the notion that use of celebrities can influence a purchase of a product while 30% agreed. For table 8, analysis shows that 39% of

the respondents held strong agreement and 51% agreed in like some to support the notion that celebrity endorsement is an effective advertising strategy.

Considering the various analyses above, it can be safety averred that beyond other psycho-social

mechanism used in selling product and or service online, celebrity endorsement has and can be more effective. Having said this, celebrity advertising endorsement may not be child’s play, yet. If

it is effective and worth what is to be spent on it.

Summary of Findings This paper evaluated the influence of celebrity endorsement in consumer patronage of soft drink

with a focus on Pepsi ‘‘Long Throat’’ Campaign. The research objectives and questions raised

earlier were answered using data gathered from the field, having administered 120 copies of questionnaire on the people of Abeokuta township. Having highlighted the adoption of celebrity

endorsement by companies and advertisers, the findings of this study show that: i. Celebrity endorsement is an effective advertising strategy.

ii. Celebrity endorsement is capable of influencing consumer’s patronage of a product,

service or cause. iii. The Pepsi ‘Long Throat’, asides having additional content was patronized more by the

usage of celebrity endorsement. iv. Many of the consumers were attracted more by Tiwa Savage the Mavins First lady

(former), as she is widely called to patronize the product (soft drink). v. People or consumers are influenced to buy more when a product, service or cause is

associated with a likeable celebrity.

vi. Reputation of celebrity used in an endorsement affects the image of a product or service.


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Conclusion

Imagine a Juventus fan seeing Cristiano Ronaldo on a Pepsi drink advertisement, and the interest it will spark in him. Aside the elation of seeing his favourite football club star player on the ads, it

will attract him or her to watch the commercial and ultimately act on the action call of the campaign message. That is the power of Celebrity endorsement campaign!

So far, this study has been able to prove beyond reasonable doubt that the use of celebrity

endorsement in advertising is effective and powerful in marketing and brand communications. This has further enhanced celebrity endorsement strategy in the scheme of things in brand

marketing, as business owners and advertisers see every celebrity as a possible spokesperson. Though, it is relatively costly to bring celebrities on to serve as product ambassadors, yet, owing

to its effectiveness in mobilizing the consumers or target audience towards a particular goal or

direction, it is a worthwhile investment. In view of this, it is concluded that celebrity endorsement is like a good and efficacious medicine which can only be bought or accessed by the rich and

affluent. Going by the foregoing, it is hereby recommended that: (i) Pepsi should use celebrities from other genres of music to capture those within 40, 50, 60

years and above. Also, celebrities from other segments of the entertainment industry should be considered in other similar marketing campaign;

(ii) Also, the use of sports personnel and actors as they doing the past should continue so that

the sports ‘crazy’ audiences of the public could be reached. (iii) Pepsi should used achievers, so when they tell their stories, others can be motivated. This

will appeal to the non-entertainment freak persons; (iv) Teen or young celebrities like Ozzybosco, Emanuella among others should be used as

brand ambassadors to reach out to the young ones.

(v) Fast rising celebrities should be considered in future marketing effort. This will reduce the cost burden of using celebrity endorsers and lead to more sales. Infact, medium-sized and

small businesses can take advantage of this to improve their brand and sales in the market place. Aside the cost advantage on the part of business owners, the upcoming celebrity

may also have a big break owing to the brand exposure.

(vi) Because the source of a brand message is expected to be widely acceptable, care must be taken in the celebrity to be used for marketing purpose as spokesperson with a bad

reputation may likely affect the image of the product it advertises.

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THE IMPACT OF TEACHERS’ MOTIVATION AND REMUNERATION ON JOB

PRODUCTIVITY AND PERFORMANCE OF ACCOUNTING EDUCATION STUDENTS

ADEYEMI Adedayo Patrick (ACA) [email protected]; 07034643693.

OYEWOLE Adegboyega Sule [email protected]; 08028487809

&

NWABUISI Olanrewaju Florence [email protected]; 08033831879

Department of Business Education MichaelOtedola College of Primary Education, NoforijaEpe,

Lagos State

Abstract This study examines the impact of teacher motivation and remuneration on job productivity and student academic performance of accounting education. Descriptive research design which employs the survey technique of data collection was used to elicit information from the respondents for this study. The population of this study comprised of Accounting education teachers in Senior Secondary School in Epe Local Government Area of Lagos State. The study sampled 50 teachers in the sampled area. The sampling technique used for this research is simple random sampling method. Epe local government Area of Lagos state was used as the centre for the generalization of the research findings. Hypotheses were raised to guide the research questions. 50 questionnaires were distributed; the questionnaire was administered and filled by 50 business studies teachers. Statistical table were used to interpret the data collected. Chi-square (x2) method was used as the data analysis techniques at 0.05 level of significance. The findings concluded that there are significant relationship between the Teachers motivation and academic performance of Accounting Students. It was recommended that the Ministry of Education in Nigeria Generally on their part should create awareness on the importance of teachers motivation and remuneration on job productivity and academic performance of accounting education students and instill confidence in Accounting education Teachers in Epe Local Government area of Lagos State and in Nigeria Generally for effective teaching and learning of Accounting education in the Senior Secondary Schools.

Keywords: Teacher. Student, Remuneration, Motivation, Productivity,Academic Performance

INTRODUCTION

Education is a learning process that involves interactions between teacher and learner to

inculcate knowledge on subject matters, when this process works well, real learning takes place. Business education is an integrated subject encompassing more than five subjects in secondary

school curriculum, these subjects includes; commerce, accounting (Book Keeping), economics and office practice. It was introduced into the curriculum to help the country achieve the national

objective of education of self-reliance and economic development. The goal of business education is to equip students with the knowledge, skills and attitudes necessary to function

effectively in any business environment (Kenya Institute of Education [KIE], 1998; Boone and

Kurtz, 1987)

In some of the African Countries like Kenya, the notion of business education being a subject of

self-reliance” was expected to give enough incentives to as many students as possible to seek

and acquire the skills and knowledge in the subject by opting to sit for it at the Kenya Certificate of secondary education (KCSE) examination level. The success of the subject would be reflected

in the number of students willing to select any business education subject offered in the syllabus and especially accounting because it is more work oriented and is readily applicable in the





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business world. But a recent investigation on the students’ enrolment reveals that only a small

number of students enroll and prepare for accounting (KNEC, 2003).

In most developing countries especially Nigeria, there is a widespread desire to change the educational system to meet the new social and technological needs. Grading systems came into

existence in the United States in the late Victorian period and were initially criticized due to high subjectivity. Different teachers valued different aspects of learning more highly than others, and

although some standardization was attempted in order to make the system fairer, the problem

continued. In a country like Nigeria, dropout tendencies and teachers’ motivation have posed a lot of repercussions for the educational sector. According to Okumbe (1999) schools as

organizations, have two goals namely performance or outcome goals and organizational maintenance goals. Schools pursue performance goals by attempting to be top performers in

national examinations. These include high academic and discipline standards, good performance in co-curricular activities and public image.According to Akanbi (1982) schools in Nigeria are fast

decaying and the “rot” in the system ranges from shortage of teaching and learning resources to

lack of effective leadership and proper motivation of teachers. He pointed out that teachers in Nigeria were unhappy, frustrated, uninspired and unmotivated. The school environment is dotted

with dilapidated buildings equipped with outdated laboratory facilities and equipment. Teachers at times have to work under the most unsafe and unhealthy conditions. This has no doubt,

translated into students’ poor performance in external examinations, their involvement in

examination malpractice, cultism and other negative dispositions. The tracking of academic performance fulfills a number of purposes. Areas of achievement and failure in a student's

academic career need to be evaluated in order to foster improvement and make full use of the learning process. Motivation involves a number of psychological factors that start and maintain

activities towards the achievements of personal goals and refers to reasons that underlie behaviour that is characterized by willingness and volition. Motivation in education can have

several effects on how students learn and their behavior towards subjects matter, Ormord

(2003). According to Sergiovanni (2014), teachers are motivated when they are able to share a common body of knowledge. Remuneration was definsed by Maicibi (2005) as pay or reward to

individuals’ work done. He quoted that remuneration was an important factor especially affecting performance in most organization.

STATEMENT OF THE PROBLEM

Despite all the efforts, achievements and remarkable developments that Nigeria government claim to have made, teachers are still expressing a lot of dissatisfaction about the lack of human

resource development, poor working conditions, poor remuneration and poor human relations

that plague the profession. This has gone a long way in affecting the productivity of teachers as well as the performance of students. Unfortunately, most past literatures focused more on only

academic performance; adequate research has not been done in the area of teachers’ motivation and productivity. Due to this factor, the researchers investigate the impacts of teachers’

motivation, remuneration on job productivity and students’ academic performance in accounting education in Epe Local Government Lagos state.

RESEARCH QUESTIONS

Does irregular payment of teachers' salaries and allowances affect student’s academic

performance in accounting education? Does non-implementation of teachers' promotions affect their morale in teaching?

Does poor teacher’s motivation by government affect their performance in the school? Does the environment at which teachers work reduce their interest and output in teaching.

RESEARCH HYPOTHESES

H01: There is no significant relationship between teachers’ salaries, allowance and student’s academic performance in accounting education.


51

H02: There is no significant relationship between teachers' promotions and their morale in

teaching. H03: There is no significance relationship between teachers’motivation and student academic

performance in the school. H04: There is no significance relationship between teachers work, their interest and output in

teaching.

LITERATURE REVIEW

Maslow’s hierarchy of needs This research is anchored on the Maslow’s Theory of needs. Abraham Maslow’s (1943, 1970)

need-based theory of motivation is the most widely recognized theory of motivation and perhaps the most referenced of the content theories. According to this theory, a person has five

fundamental needs: physiological, security, affiliation, esteem, and self-actualization. The physiological needs include pay, food, shelter and clothing, good and comfortable work

conditions etc. The security needs include the need for safety, fair treatment, protection against

threats, job security etc. Affiliation needs include the needs of being loved, accepted, part of a group etc. whereas esteem needs include the need for recognition, respect, achievement,

autonomy, independence etc. Finally, self-actualization needs, which are the highest in the level of Maslow’s need theory, include realizing one’s full potential or self-development; I call it the

pinnacle of one’s calling. According to Maslow, once a need is satisfied it is no longer a need. It

ceases to motivate Jobs’ behavior and they are motivated by the need at the next level up the hierarchy. However, in spite of Maslow’s effort and insights into the theories of motivation,

replicate studies failed to offer strong support of the need-based theories. Also, studies aimed at validating Maslow’s theory failed to find substantiation in support of the needs hierarchy (Ifinedo

2003)

Concept of Accounting Accounting is the process of systematically recording, measuring, and communicating information

about financial transactions. At the heart of accounting is the double-entry bookkeeping method.

This involves making at least two recording entries for every transaction: a debit in one account and a credit in another account. The method helps prevent errors because the sum of the debits

should equal the sum of the credits. The three major financial statements produced by accounting are the income statement, the balance sheet, and the cash flow statement.

Accounting can be done on a cashbasis (cash accounting) or on an accrual basis (accrual

accounting). Cash accounting records cash inflows and outflows in the period in which they occur. Accrual accounting records income and expenses in the period to which they are

attributable rather than when cash payments come and go. For example, a check written in April

for March's utilities would appear as a March expense under the accrual method and as an April expense under the cash method.

There are two general kinds of accounting. Financial accounting is the recording and communication of economic information in accordance with Generally Accepted Accounting

Principles (GAAP) and is primarily for external users. Managerial accounting is the recording and

communication of economic information that may or may not be in accordance with GAAP and is for internal users. Other accounting specialty areas exist, such as tax accounting, oil and gas

accounting, or forensic accounting.

There are two kinds of users of accounting information: internal users and external users. Internal users are usually company managers who use accounting information to decide how to

plan and control operations on a daily and long-term basis. External users are existing or potential investors, creditors, analysts, financial advisers, regulatory authorities, unions, and the

general public. They use accounting information to make a myriad of decisions about whether to

buy, hold, sell, lend, continue a relationship, or make an agreement. The Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), the IRS, and other

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regulatory bodies set accounting standards and requirements for accounting frequency and

presentation.

Accounting is tremendously important because it is the language of business, and it is at the root of making informed business decisions. Without accounting, managers would not know which

products were successful, which business decisions were the right ones, and whether the company was earning money. It would not know how much to pay in taxes, whether to lease or

buy an asset, or whether to merge with another company. In short, accounting doesn't just count the beans, it measures a company's success at meeting its goals and it helps investors

understand how efficiently their economic resources are being used. This is why companies must

be proficient in accounting in order to make good decisions. Accounting can be controversial, in that accounting rules and methods are sometimes subject to interpretation or can appear to

distort a company's true performance.

Concept of Motivation Motivation is defined as the process that initiates, guides and maintains goal-oriented behaviors.

Motivation is what causes us to act, whether it is getting a glass of water to reduce thirst or reading a book to gain knowledge Despite the component of this definition physiological

deficiency had not been properly addressed, Hence According to Okumbe (1998),“Motivation is a

process that starts with a physiological deficiency or need that activates behavior or a drive that is aimed at a goal or incentive.”

Motivation therefore consists of needs (deficiencies) which set up drives (motives) which help in

acquiring the incentives (goals). According to Joan Marques (2010), motivation is what people need to perform better and can only work if the right person with the right skills has been placed

in charge of the task at hand Luthans (1998). Motivation constitutes one dimension that has received considerable attention for the purposes of understanding the individual Teachers and

his/her working environment (Wofford, 1971). It is then notable that when Jobs are highly

satisfied, the production in the organization will always increase. Motivation is said to result when the sum total of the various job facets give rise to feelings of satisfaction; and when the sum

total gives rise to feelings of dissatisfaction, job dissatisfaction results. Improving any one of the facets leads to the direction of job satisfaction and eliminating any one of them leads to job

dissatisfaction (Mutie, 1993).

It is therefore evident that improvement of job satisfaction among teachers in any organization is a linchpin of productivity. Drives or motives are action-oriented while incentives/goals are those

things which alienate a need. There are three major components to motivation: activation,

persistence and intensity. Activation involves the decision to initiate a behavior, such as enrolling in an education class. Persistence is the continued effort toward a goal even though obstacles

may exist, such as taking more education courses in order to earn a degree although it requires a significant investment of time, energy and resources.

Finally, intensity can be seen in the concentration and vigor that goes into pursuing a goal. For

example, one student might coast by without much effort, while another student will study regularly, participate in discussions and take advantage of research opportunities outside of class.

Type of Motivation

i. Intrinsic motivation Intrinsic motivation is done for internal reasons, for example to align with values or simply for the

hedonistic pleasure of doing something. In work, people are intrinsically motivated by working for

an inspiring leader or in areas where they have a personal interest. According to Luthan (1981), the content theorists are concerned with identifying the needs / drives that are prioritized.

Intrinsic rewards make a teacher to forgo high salaries and social recognition to stay in the teaching profession Dornyei (2004).Intrinsic motivations are those that arise from within the

individual, such as doing a complicated cross-word puzzle purely for the personal gratification of





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solving a problem. Intrinsic motivation is what that occurs while a person is performing an

activity she/ he takes delight and satisfaction in and is seen as internal rewards (Tella 2007).An individual’s reaction to work is basic and that one’s attitude toward work can very well determine

success or failure (Stephen and Timothy, 2008). Intrinsic motivation of a teacher is influenced by factors relating to tasks such as achievement, recognition, advancement and possibility of growth

as proposed by Herzberg (1968). Professional development can provide opportunities for

teachers to grow personally and professionally. A leader needs to acknowledge the work of their subordinates immediately, publicly thank them for the work well done.

ii. Extrinsic motivation

Extrinsic motivation comes from outside us. We do it because we are impelled to, for example because we are told to by someone who has power over us. Many employment motivation

systems work on the principle of extrinsic reward, where people are 'bought' and then commanded. Whilst this is effective for simple activities, it is less useful when you want a person

to be self-driven. Extrinsic motivation is an external reward a person enjoys after he finishes his

work. According to Luthan (1998), extrinsic rewards are defined as “tangible benefit” relating to a job such as salary, fringe benefits, physical conditions, the amount of work, facilities available for

doing the work. Extrinsic factors such as organizations policy and administration, technical supervision, personal and interpersonal relations with superiors, peers, and subordinate affect the

external motivation of a Teachers (Dornye, 2004). Extrinsic motivations are those that arise from

outside of the individual and often involve rewards such as trophies, money, social recognition or praise.

Extrinsic factors relate to context or setting where the work is performed such as working

conditions, job security and interpersonal relationship with superiors and peers. According to a study carried out by Paul and Kwame (2007) on teacher motivation in Sub-Sahara Africa and

South Asia with respect to motivation patterns, it is commonly argued that working in rural schools is more difficult and thus more de-motivating than in urban schools due to poor living

and working conditions.

Teachers’ remuneration Those countries which adopt a salary structure in which “increase in salary incentives” available

to teachers at different points in their careers have positive outcomes. Deferred compensation schemes help to attract, retain and motivate high-quality teachers. (Statutory salaries refer to

scheduled salaries according to official pay scales.) Although attractive salaries are clearly

important in improving teaching’s appeal, the analysis suggests that policy needs to address more than pay. Competitive salaries, good working conditions, job satisfaction and opportunities

for development will increase the appeal and attraction of teaching profession for new entrants and existing staff alike. Good salaries, suitable working conditions and necessary elements of job

satisfaction can be helpful in attracting competent future teachers. There is substantial evidence

that teachers’ relative earnings have an important influence on career decisions – for outsiders: whether to join the profession while for insiders: whether to stay. It is general rule of teacher

labour market: the stronger are the employment prospects outside teaching the fewer qualified people will stay long-term in teaching. In particular, those people with skills who are likely to

command the best job prospects elsewhere are less likely to remain in teaching for very long.The salary scale in Nigeria for teachers is quite interesting. It has been more than six months since

the announcement by the Minister of Labor and Employment about the diversification of teachers'

salaries. However, the results of these reforms are not yet obvious. What is the situation with teachers' salary in Nigeria? It is quite difficult to findany public portal that contains data about

teachers' salary in Nigeria. It is not a surprise that the Federal Government does not pay secondary school teachers well. According to the FixusJobs.com, those that teach private schools

in Abuja may earn up to 600,000 Naira monthly.Primary schools teachers are the less fortunate

in terms of salaries. According to FixusJobs.com, they are at the very bottom of the salary scale for teachers in Nigeria. The average salary for Nigerian teachers in primary schools is 15,000


54

Naira. The high school teachers get more - N37, 000.Teachers’ compensations are important to

maintain the quality of teaching and to ensure and retain sufficient number of skilled teachers in school. As compensations and job conditions can affect both the demand for and supply of

teachers. In addition, salaries and working conditions can be helpful in attracting, developing and retaining skilled and effective teachers. In competitive labour markets, the rate of salaries paid to

different types of teachers reflects the supply and demand for those teachers. A career structure,

promotions and increments, with age and experience-earnings can provide salary incentives that attract high quality teachers and increase job satisfaction and possibly performance

Teacher Motivation

Teacher motivation refers to those variables, factors that influence teachers to do things. In its more technical usage, teacher motivation is to be seen as a psychological concept.

It is regarded as a process of organizing behavior in progress and channeling behaviors into specific course. It is a process of stimulating, channeling and sustaining behavior. According

to Asemah (2012), teacher motivation is a general term applying to the entire class of drives,

desires, needs, wishes and similar forces initiated for teachers, in order to induce them to act in desirable academically productive manner. Teacher motivation encompasses forces both within

and external to the individual.According to Hicks (2011) the internal teacher motivation comprises of the needs, wants and desires which exist within an individual; as such influence the

teachers thought which in turn leads to a positive change behavior toward improving learning.

Teacher motivation entails that the teacher is made to satisfy the life supporting elements of his physical body like food, water, shelter etc. the teacher should be able to satisfy needs like

insurance, medical allowances, retirement benefits etc.The implication is that school management should be more concerned with providing meaningful and challenging work, feeling or

achievement, added responsibility, recognition for accomplishment, opportunities for growth and advancement as all these, among other motivators drive the teacher to be acting undesirable

way.

Remuneration as factor motivating teachers of accounting in secondary schools According to Maicibi (2005) remuneration is referred to as pay or reward given to individuals

work done. He quoted that remuneration was an important factor especially in affecting

performance in most organizations. The indicators of remuneration include; basic salary, wages, healthy schemes, pension schemes, transport allowances, overtime allowances and

responsibility allowances. I. Basic Salary: According to Bratton and Gold (2003:292) a salary is a fixed periodical

payment for non-manual Jobs usually expressed in annual terms, paid per month with

generally no additions for productivity. Salary is a fixed amount of money or compensation paid to an Job by an employer in return for work performed. Salary is paid, most

frequently, in a bi weekly pay check to an exempt or professional Job. In most years, an Job‘s salary is paid in 26 even pay checks over the course of the year.

II. Wages: Refers to payment for labor or services to teachers, especially remuneration on an hourly, daily, or weekly basis or by the piece. It is also a payment to manual teachers,

always calculated on hourly or price rates (Bratton and Gold, 2003:292). According to the

Wages Act 1986, a wage is any sum payable to the Job by an employer in connection with that employment. Therefore it includes fees, bonuses, commissions, holiday pay or other

emolument relevant to the employment whether specified in the contract of employment or not. Wages include company sick pay and any other statutory payments for example

payment for time off for trade union duties and jury service. According to Farazmand

(2007) Jobs who receive the same wages regularly are more likely to perform poorly than Jobs who receive some incentives. Increasing wages motivates Jobs in the organization

and makes it easy for them to perform well. III. Pension scheme: This is one in which an employer promises a specified monthly benefit

on retirement that is predetermined by a formula based on the Job's earnings history,


55

tenure of service and age, rather than depending on investment returns ( Lee Ann

Obringer, 2011). IV. Health Scheme: Another indicator of remuneration is health insurance scheme, which is

not offered by all companies and varies as to quality and cost. Companies typically pay part of the insurance premium. Health insurance may or may not extend to immediate family

members like spouses and minor children. Dental and life insurance could also be offered

as part of a remuneration package (Lee Ann Obringer, 2011). V. Transport Allowance: This is granted to an Job to meet his expenditure for purpose of

Commuting between place of his residence & place of duty (Abhishek Raja, 2010). In the context of the study, transport allowance is given to teachers to commute between place

of residence and school of work.

VI. Accommodation or Housing Allowance: This is the amount of money paid in compensation for basic living expenses for employment situations. Amount of money given

to teachers to cater for their living expenses for employment situation (KnyszewskaElżbieta, 2010). Overtime allowance: is the additional amounts paid to hourly

Jobs who work more than 40 hours in a week (Jean Murray, 2010). According to the context of the study this implies that if teachers work beyond stipulated time, they are

entitled to this additional pay or over time allowance

Relationship between remuneration and performance School performance is directly linked to quality and quantity of teachers’ remuneration. This

means that there is a close link between teachers remuneration and performance, Remuneration

is one of the factor motivating teachers of accounting in secondary school.The most provided incentives by schools include housing, transport allowances and salaries. In order to improve

performance, school administrators try to motivate teachers using job amenities like wage increment, housing allowances, transport allowances and promotions (UNESCO, 2006).

However in schools where remuneration is on equitable grounds based on performance indicators

of individuals, derive attraction, participation, commitment and improved performance (Mingat, 2002).Hanushek (2009) postulated that people join organizations like schools to satisfy their

varied needs. Teachers for example join the teaching profession to meet their financial and social needs because in turn they are paid salaries. However teachers have not been able to satisfy

their needs and this directly affects performance. Increasing teacher salaries is frequently cited

as the best mechanism for reaching this goal. However, in contrast to the prevailing sentiment, teacher salaries have steadily declined relative to salaries in the non-teacher labor market since

the early 1980s (see Bacolod, 2007; Poldhaber, 2001; Loeb and Page, 2000).Although the relationship may not be causal, Hanushek and Rivkin (2007) found that teacher quality, as

measured by teachers‘scores on standardized tests and the selectivity of their undergraduate

institutions, also declined during the same time period. Thus, the renewed emphasis on teacher quality forces policymakers, researchers, and school administrators to focus on whether

increasing teacher wages improves teacher quality and student performance. Some research suggests that increasing teacher pay, whether it is through salary increases, performance

bonuses, or recruitment incentives, results in better student achievement on end-of-grade tests (Ferguson and Gilpin, 2009; Hanushek, Kain, and Rivkin, 1999; Lazear, 2003).In addition, Loeb

and Page (2000) found that increasing wages reduces the dropout rate. Hanushek, Kain, and

Rivkin (1999) hypothesize that higher pay may improve student achievement by encouraging teachers to exert more effort in an attempt to compensate for their higher salaries. Despite the

evidence that higher salaries have a positive impact on student achievement, some researchers contend that increasing teacher salaries may not be worth the investment. For example, there is

some evidence that the impact of salary changes is nominal compared to the impact of non -

pecuniary factors e.g., teacher working conditions or the percentage of students who receive free or reduced-price lunches (see Ferguson and Gilpin, 2009; Hanushek, Kain, and Rivkin,

1999).Goldhaber (2001) argues that, since teachers sort themselves based on non-pecuniary


56

factors, increasing salaries will not have an effect on the distribution of teachers .will leave some

students without access to high quality teachers.

Factors influencing motivation of teachers Teachers are expected to render a very high job performance, and the Ministry of Education is

always curious regarding the job performance of its teachers. Also, the Ministry of Education demands a very high measure of loyalty, patriotism, dedication, hard work and commitment from

its teachers (Ubom and Joshua, 2004). Similarly, the roles and contexts of educations’ motivational methods and tools cannot be underemphasized because high motivation enhances

productivity which is naturally in the interests of all educational systems (Oluchukwu, 2004).

According to Ngalyuka (1985), Job’s needs are influenced by a variety of individual factors and this is so because human beings have their own tastes. Educational administrators must devise

better methods of determining ways and means of rewarding teachers if they expect the reward to have an impact on performance (Kivaze, 2000). In this regard this section examines working

conditions, administration and supervision, recognition, responsibility, advancement as well as

interpersonal relations as some of motivational factors that influence teachers’ job performance. The factors that determine motivation have most of the time been categorized is being extrinsic

and intrinsic. Extrinsic factors include elements like pay, promotion opportunities, working conditions, relationship with co-Teachers, supervision and recognition. Intrinsic factors include

personality, education, intelligence, abilities and age (Herzeberg 1968).

Remuneration and Motivation of Teachers For most people, it is undeniable that monetary compensation is a major Rationale for working,

no matter what to her motivations or passions co-exist for the job. Studies conducted by

Marianne and Olson (1990), using data from Michigan and North Carolina, demonstrated that teacher salary is an important determinant of the length of time that teachers stay in teaching.

The results indicate that teachers who are paid more stay longer in teaching and teachers with higher opportunity costs, as measured by test scores or degree subject, stay in teaching less

than other teachers.

Working Conditions on Motivation of Teachers Working and living conditions have effect on teacher morale and motivation and thus their

performance. The key factors are workload, classroom conditions, management support and distance at work, housing and travel affects teachers’ morale and motivation. The high cost of

travel contributes to teacher absenteeism and lateness in schools while very large class sizes are

the norm for most teachers in countries such as India and Pakistan according to Bannell and Akyeampong (2007).

Professional development on motivation of teachers

Professional development is a means of increasing teaching professionalism. It could have a positive influence on job satisfaction of teachers and the teaching profession. Several studies on

other sectors other than education support a positive relationship between professional development, training and overall job satisfaction (Schmidt, 2004).

METHODOLOGY

Descriptive research design which employs the survey technique of data collection was used to elicit information from the respondents for this study, thereby giving the researcher a vivid

description of how The Impact Of Teacher Motivation, Remuneration On Job Productivity And

Student Academic Performance In Accounting Education.The population of this study comprised of accounting teachers in Senior Secondary School in Epe Local Government Area of Lagos

State.The study sampled 50 teachers in the sampled area. Simple random sampling technique was employed for this study. Thus, all elements in the population had equal chances of being

selected into the sample. This was done to allow for objectivity and fair representation.A self-

designed questionnaire was used to collect data on the study. The questionnaire consisted of two sections, section A focuses on personal data while section B deals with 20 questions which is a 4


57

point Likert Scaled Questionnaire ranging from strongly agree, agree, disagree to strongly

disagree.The questionnaire being a self-designed by the researchers but was subject to validation by some experts in the field of business education.

The test-retest method of estimating reliability was used to determine the reliability index of the

instrument. The results obtained from the pilot studies were correlated and a reliability co-efficient of 0.78 was obtained. Hence, the instrument was adjudged reliable.

DATA ANALYSIS AND PRESENTATION

H01: HYPOTHESIS ONE There is no significant relationship between teachers’ salaries, allowance and student’s

academic performance in accounting education. To provide answers to this research

hypothesis 1,2,3,4 and 5 of the questionnaire were used. Hence, the analysis of the respondent shows the calculated value, affected value and degree of freedom as follows;

TABLE ONE: DECISION OF FINDINGS

Response SA A D SD Total D.F C.Val Table

value

Decision Level of

Significant

Observed 81 68 20 81 250 12 158.42 21.026 Reject 0.05

Calculated value x2 = 158.42, DF= 12 (0.05)

Tabulated value x2 = 21.026 (significant).

Decision: since the calculated value x2 is greater than tabulated value of 21.026 at 0.05 level of significance therefore the null hypothesis is rejected and the alternative hypothesis is accepted.

This implies that there is a significant relationship between teachers’ salaries, allowance and student’s academic performance in accounting education.

H02: HYPOTHESIS TWO

There is no significant relationship between teachers' promotions and their morale in teaching.

To provide answers to this research hypothesis 6,7,8,9 and 10 of the questionnaire were used. Hence, the analysis of the respondents shows the calculated value, affected value and degree of

freedom as follows; TABLE TWO: DECISION OF FINDINGS

Respons

e

SA A D SD Total D.F C.Val Table value Decision Level of

Significant

Observed

48 40 57 105 250 12 74.61 21.026 Reject 0.05


Tabulated value x2 = 21.026 (significant). Decision: since the calculated value x2 is greater than tabulated value of 21.026 at 0.05 level of

significance therefore the null hypothesis is rejected and the alternative hypothesis is accepted.

This implies that there is a significant relationship between teachers' promotions and their morale in teaching.

H03: HYPOTHESIS THREE There is no significance relationship between teachers’ motivation and student academic

performance in the school. To provide answers to this research hypothesis 11,12,13,14 and 15 of


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the questionnaire were used. Hence, the analysis of the respondents shows the calculated value,

affected value and degree of freedom as follows; TABLE THREE: DECISION OF FINDINGS


value

Decision Level of

Significant

Observed 101 78 34 37 250 12 52.24 21.026 Reject 0.05

Calculated value x2 = 52.24, DF= 12 (0.05) Tabulated value x2 = 21.026 (significant).

Decision: since the calculated value x2 is greater than tabulated value of 21.026 at 0.05 level of

significance therefore the null hypothesis is rejected and the alternative hypothesis is accepted. This implies that there is a significant relationshipbetween teachers’ motivation and students’

academic performance in the school.

H04: HYPOTHESIS FOUR There is no significance relationship between teachers work, their interest and output in teaching.

To provide answers to this research hypothesis 16,17,18,19 and 20 of the questionnaire were used. Hence, the analysis of the respondents shows the calculated value, affected value and

degree of freedom as follows;

TABLE FOUR: DECISION OF FINDINGS


value

Decision Level of

Significant

Observed 126 47 32 45 250 12 142.91

21.026 Reject 0.05


Tabulated value x2 = 21.026 (significant).

Decision: since the calculated value x2 is greater than tabulated value of 21.026 at 0.05 level of

significance therefore the null hypothesis is rejected and the alternative hypothesis is accepted. This implies that there is a relationship between teachers work, their interest and output in

teaching.

4.2 DISCUSSION OF FINDINGS From the analysis gathered, the findings were as follows;

From the result, it was revealing that there is significant relationship between teachers’ salaries, allowance and student’s academic performance in accounting education. Based on the fact that

calculated value of x2 which is 158.42 is greater than the table value of 21.026 at 0.05 significant

level. The result also implies that there is significant relationship between teachers' promotions and their morale in teaching. Based on the fact that calculated value of x2 which is 74.61 is

greater than the table value of 21.026 at 0.05 significant level.

Furthermore, from the result, it implies that there is significant relationship between teachers’ motivation and student academic performance in the school. Because the calculated value of x2

which is 52.24 is greater than the table value of 21.026 at 0.05 significant level. Similarly and conclusively from the result, it infers that there is a significant relationship between

teachers work, their interest and output in teaching. Based on the fact that calculated value of x2

which is 142.91 is greater than the table value of 21.026 at 0.05 significant level.


59

SUMMARY AND CONCLUSION

This research focused on the impact of teachers’ motivation on job productivity and academic performance of accounting education students. Relevant literature was gathered for the study

and simple random sampling technique was used in selecting the sample. Data was gathered using a four-point likert scale and the hypotheses were tested using chi-square statistical tool at

0.05 level of significance. From the result above, it was revealed that there was significant

relationship between teachers’ salaries, allowance and students’ academic performance in accounting education, based on the fact that calculated value of x2 which is 158.42 is greater

than the table value of 21.026 at 0.05 significant level.The result also implies that there was significant relationship between teachers' promotions and their morale in teaching.

RECOMMENDATIONS

Considering the observed nature of the precise link between teachers’ motivation and student’s academic performance in senior secondary schools in Epe local government area of Lagos state

for the study, the following recommendations were proffered:

i. Government should make sure policies are formulated to promote regular and consistent remuneration for all teachers in Nigeria so that their teaching methods and student

academic achievement can be positively influenced. ii. Non-governmental organization should provide means of assisting both public and private

secondary schools in motivating their teachers so that the effect can improve teachers

teaching methods and student’ s academic achievement. iii. School management should encourage their accounting teacher/teachers to enroll in full-

time and part-time professional training programs that are available all over the country. iv. Government should ensure regular appraisal of schools and their teachers to know their

professional needs. v. Government and non-governmental organizations should provide funds to sponsor

accounting teachers for their personal development.

Suggestions for further Studies

Notwithstanding the conclusionreached and the recommendations given under this study, moe research work work can still be undertaken on the variables under study. The researchers

therefore encourage more studies that have impact on teachers’ productivity, motivation and academic performance of students. It is almost certain that the findings of this study will be of

great use to any researcher who intends to make them a point of reference in the future.

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Asemah. E.S. (2012). The effect of teachers motivation’ achievement: The case of elementary

schools in France.” school effectiveness and school improvement Harvard Journal on Legislation (3): 252-279.

Bannell. P & Akyeampong, A (2007) Teacher Motivation in Sub-Sahara Africa and South Asia. Education research (71). DFID. ISBN 9781861928733.

Boone, L.E.& Kurtz., D. L (1987). Teacher motivation and incentives in Kenya.

Bratton J & Gold, J. (2003).Teacher remunerations and student achievement: A review of state policy evidence. Educational Policy Analysis Achievements, (292).

Dornyei, Z. (2001). Teacher Education, Teachers’ Conditions and Motivation. Sida Farazmand, A.(2007).Teachers Wages and services effect on improving student’s achievement

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Hanushek, E. & Rivkin, S. (2007). Teacher Quality, Handbook of the Economics of Education, 2, 1051-1078.

Hanushek, E. (20009). Teachers’ Job Amenities in the Developing world: A performance in Uganda.

Herzberg, F. (1968). One more time: how do you motivate employees?

Hicks, J. (2011) Internal teachers motivations and teacher practices in different classroom contexts: Implications for teachers training & workshop Development Journal of Education,

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Jean, M.A. (2010). Teachers Allowances and there effects on the academic performance of the Accounting Students. Educational Journal of Teacher Productivity.Journal of education in

Kenya. Kivaze. J. M (2000). Evaluation of incentives used for teachers in secondary schools in Marak

wet District and their influence on performance in KSCE Kwame, I & Paul, B.K (2007) Teachers Remuneration, needs and job performance of public

servants in AkwaIbom State. A Ph.D. dissertation, University of Calabar.

Lazear, E. (2003). Teachers’ Incentives. Swedish Economic Policy Review, 10,179-214. Loeb, S & Page, M.E. (2000). An investigation into the problems of teachers’ management in

Lagos State Secondary Schools. Studies in Educational Planning and Administration,African Journal of Educational Management 2(3), 50–59.

Luthans, F. (1998) Organisation Behaviour. 8th Edition, Irwin McGraw-Hill, Boston.

Maicibi P A. (2005) “Job satisfaction among secondary school teachers in OsunState” Nigerian Journal of Educational Administration.

Marques, J.F. (2010). Spirituality in the workplace: Deloping an Integral Model and a Comprehensive Definition.

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of Employees: Implication for Guidance and Counselling. Educational Research Journal, Vol. 4. No. 3

UNESCO, 2006. Scolarisation Primaire Universelle: Un objectif pourtours. Document statisque. MINEDAF VIII, UNESCO.

Wofford, E.O. (1971) Management motivational strategies as factors in teacher task

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COMPETITIVE INTELLIGENCE AND ITS APPLICATION IN SMALL AND MEDIUM

ENTREPRISES (SMEs) IN LAGOS METROPOLIS OLADIMEJI, Maruf Sanjo (PhD)

Department of Business Administration Faculty of Administrative and Management

Olabisi Onabanjo University, Ago-Iwoye

AJETUNMOBI, Lookman Olaseni

PhD Studentin Department of Business Administration Faculty of Administrative and Management

Olabisi Onabanjo University, Ago-Iwoye [email protected]

& ODUNAYO, Henry Adewale (PhD)

Department of Economics,

Adeniran Ogunsanya College of Education, Ijanikin, Lagos

Abstract Competitive Intelligence (CI) is imperative germaine and it has grown to become a key success factor to any business whether large, small or medium especially in this current period of numerous environmental challenges. This research work examines the level of awareness of CI process and its benefit. Survey research design was adopted for this study. Members of Lagos State Chapter of Nigerian association of Small and Medium Enterprises (NASME), the Lagos Chapter was chosen because Lagos is the commercial nerve center of Nigeria. A total of 200 copies of questionnaire were administered to the member of the association that was randomly selected using simple random sample technique. Chi-square statistical tool and t-sample test were adopted for the data analysis, the findings reveals that SMEs operators are fully aware of the importance of competitive Intelligence, its adoption has enhanced SMEs in strategic and tactical decision making which has enabled them to survive the competitive pressure in the business environment. Hence, the study concluded that CI has influence on the survival of SMEs in Nigeria.

INTRODUCTION:

The concept of competitive intelligence has grown to become a key success factor of any business whether large, small or medium especially in this current period characterized by

numerous environmental challenges i.e. economical and financial turbulences, competitive pressure and sustainability. This numerous environmental challenges have brought about rapid

changes in the business environment. In order to survive in this turbulence, dynamic and competitive environment, organization must proactively respond to the opportunities, challenges,

risk and limitations posed by the external environment. To better understand the external

environmental forces that bring about rapid changes, organizations must develop effective response measures which will enable them to maintain or/ and improve their position in the long

term. Thus, competitive intelligence is importance for firms in practice and in research.

According to Salguero, Gámez, Fernández and Palomo (2019), CI enhances the practices of strategic management. Adidam, Banerjee, and Shukla (2012) asserted that CI enhances business

performance via strategic quality plans, internal communication and improvement of managers’ knowledge. Adoption of CI enables organizations to discover opportunities in the task

environment. As noted by He, Shen, Tian, Li, Akula, Yan and Tao (2015), CI helps in creating

value for organizations to achieve the stated objectives and goals. Maritz and DuToit (2018) opined that companies with competitive Intelligence programmes have better knowledge of their

markets, better cross-functional relationships between their business units and a greater ability to develop sustainable competitive advantages.



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Wright, Eid and Fleisher (2009) posits that CI provides firms specifically banks with actionable

intelligence that can help them strategize and make effective decision in the face of constant

challenges thrown up by a dynamic, challenging and competitive market, shrinking global boundaries and increasing customer centered markets. CI enables organizations to sustain and

develop distinct competitive advantage by using the entire organization and its networks to develop actionable insights about the environment in terms of customers, competitors,

technology and other stake holders within the business environment (Tahmasebifard, 2018).

CI generates information for both strategic and tactical purposes; it also engages both internal and external environments to acquire information. This implies that competitor intelligence

consider mostly the external environment of the organization (Ali koseglu, Ross & Okumus, 2015)

The importance of SMEs in any economy cannot be overemphasized. SMEs tends to be avenue for many commercial and economic activities which has provided employments opportunities in

all sectors of an economy especially in developing economies like Nigeria, Despite the great influence of SMEs in a country like Nigeria, it was observed that SMEs in Nigeria find it difficult to

grow as they are confronted with series of environment challenges and competition from large scale business which in turn hinders the SMEs from achieving its purpose of establishment as

noted by Ogunleye and Okunbanjo (2019); Ayodeji (2018). It is on this note that the study wants

to view the application of competitive intelligence among SMEs operators in Lagos State, Nigeria. Little studies that have being carried out on CI and SMEs reveal that the scope was from

developing countries (AinulMohsein, Hasliza, & Noor,2016; Ncube, 2015; Magasa, Mphahlele and Awosejo, 2014; and Nenzheele, 2014) but little has been done in Nigeria SMEs. This makes this

study to focus on competitive intelligence and SMEs in Nigeria context.

Literature Review Conceptual Review

Competitive intelligence (CI) as a concept is very broad as numerous definitions for CI in

contemporary practice and scholarly publications has no single definition that is likely to be precise and universally accepted (Flecher & Wright, 2009, Brody 2008). However, competitive

intelligence may be regarded as the acquisition and use of information about competitors, new entrance, customers, suppliers, competing industries in order to support decision making process

for enhancing competitiveness of organization (Anica & Cucui, 2009). CI is the process of

obtaining and analyzing publicly available information to achieve the organizations objective by facilitating organizational learning and improvement (Godon, 2002). Furthermore, Anica- Popa

(2009) conceptualized competitive intelligence as a continuous process of gathering data, information and knowledge about actors (competitors, customers, suppliers, government and

other stakeholders) that interact with organization within the business environment in order to

support decision making process for enhancing competitiveness of the organization.

Colakogh (2011) refers to CI as a systematic process initiated by organizations in order to gather

and analyze information about competitors and the general socio political and economic

environment. (Ferrier, 2001) view C I as a process in which organizations capture information on competitors and their environment and applies it in their decision making process and planning

with the purpose of improving the performance of the business. C I is defined as a process or practice that produce actionable intelligence by ethically and legally collecting, processing and

analyzing information about the external or and competitive environment in order to help in decision making and provide competitive advantage to the enterprise. However Wright, Pickton

and Calof (2002) distinguished competitor intelligence from competitive intelligence. The

researchers posit that competitor intelligence is viewed as those activities by which company determines and understand its competitors, in terms of their strength and weaknesses and

anticipates their moves. Competitive intelligence on the other hand extends the role to include consideration of competitor responses to consumer / customers need and perceptions and one’s

own responses in the strategic decision – making process. Gordon (2002) states that competitive


63

intelligence is geared towards making your company more competitive and thus include data

from customer, channel intermediaries, other stakeholders and even non competitors who can help you outperform targeted competitors, making your company more competitive, therefore,

Competitor intelligence is strictly intelligence about competitors and it is thus a sub set of competitive intelligence.

Ncube (2015) conceptualize CI as an ethical process whose purpose is to monitor the competitive

landscape with the objective of providing actionable edge to the organization. C I is not a high state game of industrial espionage targeted at stealing or exposing a competitors trade secret

and other proprietary property. (Nasri, 2012) states that competitive intelligence is the use of

public sources to develop data about competitors and the market environment and its transformation in usable information through analyses. Boxon, Stephens and pritcheff (2002)

state clearly the difference between CI and industrial espionage, to them CI is a legal and ethical process, using sources that are in the public domain. Espionage on the other hand employs

unethical means to gather commercially sensitive information.

Most of what have being working on CI focus on lager corporations, (Olofin, 2017, Nasi and Zarai, 2013, Nzewi, Chinekezie & Amizoba, 2016, &Duplessis and Gulwa, 2016). Their argument

is based on the fact that CI requires a large commitment of organizations response which can

easily be afforded by the large corporation. However, some authors argue that the majority of SMEs are aware of CI, although they do so informally, (Nenzhelele, 2014, Ncube, 2015; Magasa,

Mphadilele and Awosejo, 2014). SMEs are very small and lack resources to formalize their CI (Nerizhetele 2014). On the other hand, (Ncube 2015) in his study posits that CI is equally

important to SMEs as it is to large multinational corporations, and also emphasize that CI may be

more important to SMEs than it is to large corporations as smaller companies cannot absorb market mistake in the same way large ones can. Abdul – Mohin, Abdul- Halim and Ahmad (2015)

confirms CI as a tool to boost innovative performance among Malaysians SMEs. However, the benefits that are associated to CI in the large firm can as well be useful to SMEs as posited by

(Ncube (2015). in addition Gordon (2002) states that C I assist company to do the following: understand strengths and weakness relative to specific competitors and the opportunities and

threats they represent and predict what they will do next, compete for scarce input resources,

win in respect of key success factors such as customer access, customer influence and channel support and also avoid the mistake competitors are making or might make.

Small and Medium Enterprise (SMEs)

SMEs are considered as the backbone of economic growth in all courtiers across the globe. They contribute in providing job opportunities and act as suppliers of goods and services to large

enterprises (Singh, Gary & Deshimukh, 2008). The conceptualization of SMEs is usually based on

each country’s perception on the role of SMEs in the economic development. According to SMEDAN (2012), a business is defined as small in the manufacturing sector if it employs fewer

than 100 employees. In an attempt to separate small enterprises from medium enterprises, Abosede, Obasan and Alese, (2016) opined that small enterprises are those enterprises whose

total asset excluding land and building are above 5 million naira but not exceeding 50 million Naira with total workforce of above 10 but not exceeding 49 employees, while the medium

enterprises are those enterprises whose total asset excluding land and building are above 50

million Naira but not exceeding 500 million Naira with a total workforce of between 50 and 199 employees.

Theoretical Underpinning

Stakeholder Theory The stakeholder theory was first developed by Freeman (1984) who posits that existing

management theories were not equipped to address the kind of changes which are occurring in the business environment. He argued that these environmental “shifts” were occurring among

both internal stakeholders (owners, customers, employees, and suppliers) and external


64

stakeholders (governments, competitors, consumer advocates, environmentalists, special interest

groups, and the media). Hence, Freeman (1984) cautioned that managers need to take into account all of those groups and individuals that can affect, or are affected by, the

accomplishment of the business enterprise.

Stakeholders conceptualize as individuals, groups and organizations that have interest in the processes and outcomes of the firm and upon whom the firm depends for the achievement of its

goals (Freeman, 1984; Freeman, Harrison & Wicks, 2007). Freeman (1984) refers to them as any group or individual that can affect or be affected by the realization of a company’s

objectives. Some individuals, groups and organizations are easily defined as stakeholders because of their involvement in the value producing processes of the firm. They include

employees and managers, shareholders, competitors, financers, customers and suppliers. These

stakeholders are from the external environment of a business and they are what competitive intelligence focuses on, hence, the relevant of this theory to the objective of the study.

Empirical Review There are studies on competitive intelligence (CI) with different variables across the globe. The

studies of Kosemap (2018); Koseoglu, Ross and Okumus (2016); Casado and Jimenze (2016);

Casado, Resende and Aldeanueva (2016) found a positive relationship between CI and performance of organizations. Similarly, Ade, Akanbi and Tunbosun (2017) focused on large firms

in Nigeria and employed competitive intelligence in their study and revealed that CI is an important predictor to organizational achievements. Furthermore, Tahmasebifard (2018) studied

the role of competitive intelligence on market performance and indicated that competitor

intelligence; market intelligence and technology intelligence haves proxies for CI, and also have positive and significant effect on market performance. Salguero et al. (2019) found that

competitive intelligence contributed positively to organizational efforts to achieve competitive advantage. Maritz and DuToit (2018) used content analysis in their study on competitive

intelligence practice to conclude that CI is an integral practice within organization strategies to achieve the vision of the organization.

Hypotheses of the Study

Based on a review of previous studies is it postulated as follows: - SMEs operator are not aware of CI process and its benefit

- Adoption of CI will not enhance the survival of SMEs.

Methodology The study adopts descriptive research design. The study is carried out in Lagos metropolis as a

mega city in Nigeria as well as the city with large numbers of SMEs. According to Olajide (2018), the population of SMEs in Lagos metropolis under the umbrella of Lagos State Nigerian

Association of Small and Medium Enterprises (NASME) is 500 SMEs. The study adopts simple random sampling and primary source of data is adopted. The study used questionnaire as the

research instrument to achieve the stated objectives. 200 questionnaires are administered to the

SMEs operators in Lagos State. The questionnaire is grouped in two sections. Section A focuses on the demographic information of the respondents while the section B focuses on the questions

in line with the hypotheses formulated. The study utilizes 5 Likert scale in ranking the respondents responses. The reliability test is conducted and the study adopts research

questionnaire of Tshilidzi (2012) and Chi-square statistical tools and t-sample test are used as

data analysis tools in order to achieve the objectives of the study. Table 4.1: Reliability and Validity

S/N Variables Reliability Validity No of Items

1 SMEs operator and CI process 0.93 0.815 7

2 Adoption of CI and survival of

SMEs.

0.81 0.725 7

Source: Research Study, 2019 Table 4.1 showed the reliability of the study. Cronbach Alpha was used to compute the reliability

test in line with the stated hypotheses. The reliability values of SMEs operator and CI process;


65

and adoption of CI and survival of SMEs showed 0.93 and 0.81 respectively. And according to

Peighambari, (2007), reliability that is above 0.70 is considered to be consistence and reliable. Thus, the data of the study are reliable. KMO was employed to test the validity of the research

instrument. It is showed that the validity results of the hypotheses are above 0.60 which is considered to be good for further analysis.

Test of Hypotheses

H1: SMEs operators are not aware of CI process and its benefit

Source: Researcher Field Survey.

Table 4.2 displays the results of hypothesis one of this study through the test-statistics. It is

indicated that the Chi-Square value of the responses is 45.248 with 7 as the degree of freedom (Df). The asymptic significant value is .000 which is less than the confidence interval level of

0.05%. Thus, the study rejects the null hypothesis that SMEs operators are not aware of CI process.

H2: Adoption of CI will not enhance the survival of SMEs.

Table 4.3: Test Statistics

Adoption of CI and survival of

SMEs

Chi-Square 43.200 Df 7

Asymp. Sig. .038

Source: Researcher Field Survey.

Table 4.3 reveals the results of hypothesis two formulated in this study through the test-

statistics. It is showed that the Chi-Square value is 43.200 with 7 as the degree of freedom (Df). The asymptic significant value is .038 which is less than the confidence level of 0.05%.

Therefore, the study rejects the null hypothesis that adoption of CI will not enhance the survival of SMEs.

Discussion of Findings

The results revealed that the SMEs operators were actually aware of CI. This is aligned with other researchers (Ncube, 2015 & Salguero et al, 2019). This exposed that CI is equally important to

SMEs as it is to larger Multinational Corporation. This implies that CI is important to organization

regardless of its size. Infact, CI may be more important to SMEs than it is to larger corporation because SMEs are affected more on the dynamism of the external business environment. The

result further revealed that adoption of CI will enhance the survival of SMEs, This is aligned with previous studies (Ncube, 2015; Tahmasebifard, 2018; & Salguero et al, 2019), and this implies

that CI has a significant impact on firm performance, that is, adoption of CI is beneficial as it

could assist managers to better understand their organizational environment and thus be able to predict and win over their most valuable customers. Ncube (2015) specifically stated that CI may

be more important to SMEs than it is to large corporations as smaller companies cannot absorb market mistake in the same way large one can.

Table4.2: Test Statistics

Awareness of CI process and

its benefits

Chi-Square 45.248 Df 7

Asymp. Sig. .000


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Conclusion and Recommendations

Competitive intelligence has been established to be an important practice for SMEs in order to continue to be in existence. The study established that SMEs operators are fully aware of the

competitive intelligence as well as the benefit it will bring to the organization in order to survive the turbulent business environment in an economy like Nigeria. It is also evident that the

adoption of CI by these SMEs operator in Nigeria has aided them to survive the competition

pressures in their respective industries. Hence, this study concludes that CI has an influence in the survival of the SMEs in Nigeria. On this note; this study suggests that SMEs operator should

continue to adopt and practice competitive intelligence so as to continue to be in operation and outsmart their competitors.

Policy Implication

It has been established that CI is importance towards achieving organizational goals. Thus, CI will assist managers and owners of SMEs to better understand their organizational environment

as well as to design appropriate strategies to win in respect of key customer and market share.

SMEs should invest in the appropriate technology and human resources development so as to enable them to be in position to effectively apply and benefit from CI. Also, the findings of the

study can be used as a platform for further studies.

Suggestion for further study Further studies on CI can employ parametric analysis such as regression, correlation and T-test

to mention a few. The study can also be replicated in other sectors of the economy such as banking, manufacturing and insurance industries.

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KNOWLEDGE MANAGEMENT AND MANUFACTURING FIRMS’ PERFORMANCE IN

NIGERIA

ADELEKAN Saidi Adedeji, PhD1

ERIGBE Patience Ajirioghene, PhD2

OJO Olanipekun James, PhD3

TORIOLA Anu Keshiro4 12&3Department of Business Management, Mountain Top University, Ogun State

4 Department of Economics, Hallmark University, Ijebu-Itele

Abstract The management of Knowledge and intellectual capital are increasingly recognised as the main source of competitive advantage in the knowledge based economy. Knowledge management has engendered some research interest, yet it effect on manufacturing firms performance appears not to have been fully explored. This study examined the effect of knowledge management on the performance of manufacturing firms in Nigeria, by employing two components of knowledge management (knowledge creation and knowledge application). Survey research design was adopted, through the administration of structured questionnaires on some purposively selected staff of five manufacturing firms in South-West, Nigeria. The research instrument was validated through content validity index (CVI) while the reliability of the research instrument was tested through test-retest method. The findings revealed that the two components of knowledge management adopted for this study have individual positive significant effect on manufacturing firms’ performance with coefficients and probability values of: knowledge creation (0.54, P-Value<0.05) and knowledge application (0.704, P-Value<0.05). The F-statistics revealed that the two components of knowledge management adopted for this study have positive significant combined effect on manufacturing firms performance in Nigeria (F-statistics= 38.981 < 0.05). The adjusted coefficient of determination (adjusted R2) of 0.625 implied that 62.5% change in manufacturing firms’ performance is explained by the combined knowledge management components (knowledge creation and knowledge application). It is therefore concluded that knowledge management components (knowledge creation and knowledge application) are important drivers of manufacturing firms’ performance. It is recommended that manufacturing firms should embrace effective knowledge creation and application towards the enhancement of their overall performance.

Keywords: Knowledge Management, Knowledge Creation, Knowledge Application,

Manufacturing Firms’, Performance

INTRODUCTION Knowledge and intellectual capital are increasingly recognised as the main source of competitive

advantage in the knowledge based economy. Business entities now give increased attention to

the management of knowledge. The economy of the world is changing fast and the knowledge assets as well as knowledge innovation (KI) is fast becoming the primary source of the

organization competitive advantage. Companies are facing important challenges such as the need to reduce the time-to-market, the development and manufacturing costs, or to manage produce

with more and better technology. Thus, the current situation is encouraging the implementation

of knowledge management (KM) and innovation management (IM) to increase competitive advantages. Nonaka (1994) argued that the concept of knowledge is multifaceted and with

multilayered meanings. Valdez - Juarez, Garcia- perez and Maldonado- Guzman (2016) posit that knowledge is abstract in reality and hard to pinpoint at, knowledge focus more on knowing how

to interpret information and providing new insight to solve problems at hand.

According to Hislop (2009), knowledge management is an umbrella term that captures any deliberate efforts to manage the knowledge of the employees which can be attained via various

methods either directly such as use of particular information communication technologies (ICT)


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or indirectly through management of social processes and structuring of firms in a particular way.

Knowledge management is thus a planned structure approach to managing, creating, sharing, harvesting and leverage of knowledge as an organizational asset to enhance a company ability,

speed and effectiveness in delivering products or services for the benefit of clients in line with its business strategy.

The creation and diffusion of knowledge have become an increasingly important factor in

competitiveness. More and more knowledge is being regarded as a valuable commodity that is

embedded in products and in tacit knowledge of highly mobile employees. Today knowledge is increasingly being viewed as a commodity or an intellectual asset.

Scholars, such as Githi (2014) studied the effect of knowledge management on firms innovation

performance and found that knowledge management practices is highly linked with innovative performance of firms, however the study employs the following elements of knowledge

management leadership policies and strategies, training and mentoring reward system and communication. Furthermore, Valdez-Juarez, DE-Lema & Maldonado - Guzman (2016) found that

knowledge management has a significant influence on innovation but the influence on the level of performance of small and medium enterprise (SMEs) is significant. Studies examining the

effect of knowledge management on manufacturing firms’ performance in Nigeria are sparse and

the findings from the few that exist are inconclusive. In addressing this research gap, this study examines the effect of knowledge management on the performance of manufacturing firms in

Nigeria.

Objective of the study The main objective of this study is to examine the effect of knowledge management on the

manufacturing firms’ performance in Nigeria. While the specific objectives are to: i. Examine the effect of knowledge creation on the performance of manufacturing firms in

Nigeria

ii. To investigate the effect of knowledge application on the performance of manufacturing firms in Nigeria

iii. To examine the combined effect of knowledge management elements on performance of manufacturing firms in Nigeria

Research Hypotheses In line with the research objectives the following hypotheses are formulated:

H01: Knowledge creation does not significantly affect the performance of manufacturing firms in Nigeria

H02: Knowledge application does not significantly affect the performance of manufacturing firms in Nigeria

H03: Combined knowledge management elements do not significantly affect the performance of

manufacturing firms in Nigeria

2 Literature Review Knowledge management has its origins in a conceptual perspective based on theory developed

by Cohen and Levinthal (1990) that involves the absorptive capacity of employees to be more

innovative. Knowledge management focus on extracting knowledge from technology, competitors and investment in Research and development that generate productivity in an organization

(Caragliu & Nijkamp, 2012).Knowledge is acquired from both inside and outside the company using a spiral model suggested by Nonaka and Takauchi (1994).This models involves the

members of all lines of the organization and allows them to gain competitive advantage(Chen, Lin & chang, 2009, porter,2011; Zack, Mckeen & Singh, 2009).Other theories solely consider

explicit knowledge as the means to generate innovation and productivity in an organization

(Hansan, Nohria, & Tierney, 2005).


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Knowledge management is a systematic process to acquire, share and use productive knowledge

in the process of improving the performance of organization (Augier & Teece, 2009). Knowledge management is of utmost importance for the value of the business (Anond, kant, patel, & singh,

2012; Battistella, De-Toni & pillon, 2015). Knowledge management encourages the transfer of information for the purpose of enhancing the capabilities of employees and strengthening the

organizational culture (Amidon, Formica, Mercier-laurent & Ulikool, 2005; Davenport, Thomas &

cantel, 2012). This corporate strategy is an effective way to encourage innovation and to increase competitiveness and profitability in companies of different sizes (Abdolvahabi,

sofiyabadi, Abdolvahabi, and Valmohammadi, 2014; Bognoli and Vedovato,2014; palacios-Marques ,Soriano, and Huarng,2015). Since its proposition, knowledge management has been

adopted mainly by large corporations (Cohen & Olsen, 2015; Delen & Zaim, 2013).

The Concept of Knowledge Creation Knowledge creation is the process of sharing, creating, using and managing an organization’s

knowledge and information. It is a multidisciplinary approach to making the best use of

knowledge or information. It is also the formation of new ideas through interactions between explicit and tacit knowledge in individual human minds. According to Nonaka (1994), knowledge

and creation consists of socialization (tacit to tacit), externalisation (tacit to tacit), combination (explicit to explicit), and internalization. Put simply; it is the creation of ideas, which is at the

heart of a company’s competitive advantage.

Knowledge creation is the formation of new notions and concepts. This occurs through interactions between explicit and tacit knowledge in people’s minds. Explicit knowledge is

information that is searchable and easy to find. Users can collaborate regarding the value and use of this type of explicit knowledge. Tacit knowledge, on the other hand, exists in people’s

minds. It is not searchable like explicit knowledge. It is also not easy to share with another

person orally or in the development of new knowledge. In fact, many large corporations, non-profit organizations and public institutions dedicate resource to knowledge management.

A number of characteristics informing data collection and analysis for knowledge creating have

now become evident: knowledge creating occurs over time and while including events of creation does not unduly emphasize the identification and measurement of these events of creation,

knowledge creating does not assume the pre-existence of knowledge in contrast to knowledge transfer and creation approaches. The nature of knowledge is not confined to explicit knowledge.

Also tacit knowledge does not require conversion and for amplification, knowledge creating

accepts that varying degrees of knowledge quality need to be catered for beyond criteria linked to events of transfer or creation (Gibbons et al., 1994; Tubigi & Alshawi, 2015), it is also

associated with the facilitating or enabling of processes.

According to Wellman (2009), knowledge creation is the ability to create new knowledge at the heart of the organization’s competitive advantage. Sometimes this issue is not treated as part of

knowledge management since it borders and overlaps with innovation management. It is known that “knowledge management” is associated with significant benefits which can empower

organizations to get more competitive advantage in their market. Knowledge sharing and knowledge creation are the two vital aspect of knowledge management which play an important

role in creating organizational value.

Concept of Knowledge Application Knowledge application refers to the utilization of available knowledge to make decisions and

perform tasks through direction and routines (Becerrafernandez & Sabherwal, 2010). Direction

refers to the process through which the individual possessing the knowledge directs the action of another individual without transferring to that individual the knowledge underlying the direction.

It is more that an individual who possesses knowledge advices another. For example, direction is the process used when a production worker calls an expert to find out how to solve a particular


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problem with a machine and then proceeds to solve the problem based on the instructions given

by the expert.

Routines involve the utilization of knowledge embedded in procedures, rule, norms, and processes that guide future behavior. Both direction and routine are applicable to either tacit or

explicit. Knowledge application does not require the person applying the knowledge to understand it. The patterns of knowledge application in new situations are explored from the

perspectives of modeling and transfer.

Mill and Smith (2011) posit that knowledge application refers to making knowledge more active and relevant for the firm in creating values. For organizations to create value they need to apply

knowledge to their products and services by various means such as repackaging available

knowledge, training and motivating its people to think creatively, and utilizing people`s understanding of the company`s processes,products and services.

Firm Performance

Firm performance is a multifarious term which may include different shades of meaning. It relates to organizational performance, functioning of the firm and outcomes of its operations.

More often than not, firm performance implies the organizational performance, including manufacturing of products and services, functioning of different units of the firm, performance of

its employees and outcomes of their work in total. At the same time, the firm performance can be viewed in a broader context as a part of the business development of the firm. What is meant

here is the fact that the business development mirrors the firm’s performance and allows

assessing the extent to which the organization performs effectively. Firms’ performance can be measured in terms of financial and non-financial metrics or combination of both (Eze, 2018)

Theoretical Framework

Knowledge-Based Theory (KBT) Knowledge-based theory was propounded by Wernerfelt (1984); the theory postulates that

knowledge is the most strategically significant resource of a firm. As argued by Wernerfelt (1984) the major determinants of firm competitiveness and superior company performance are varied

knowledge foundations and competences among the company’s since knowledge-based

competencies are usually difficult to be copy and socially complex. Knowledge is entrenched and inbuilt in many entities like organizational culture and identity, policies, routines, documents,

systems, and employees. This perception originally promoted by Penrose (1959) lays its foundation from the Resource-Based View of the firm.

In spite of Resource Based View of the firm recognizing what knowledge bases in companies will

help enhance competitive advantage, advocates of Knowledge Base View claim that the resource-based perspective is not that much far-fetched from Resource Base View. Specifically, knowledge

is accorded a broad resource rather than one that has special characteristics by RBV. Thus, it

does not make a distinction of the various types of knowledge-based capabilities. Information technologies as stated by Alavi and Leidner (2001) can be vital in the Knowledge Based View of

the firm because information systems can be used to synthesize, enhance, and expedite large-scale intra- and inter-firm knowledge management.

3 METHODOLOGY

This section presents the methodology adopted to carry out this study, as such it focuses on the methodology employed to ascertain the effect of knowledge management (as measured by

knowledge creation and knowledge application) on the performance of manufacturing firms in

Nigeria. The study employs survey research design, through the administration of structured questionnaires on 396 purposively selected staff of five manufacturing firms in South-West,

Nigeria. The research instrument was validated through content validity index (CVI). The instrument was assessed by three academic staff of Mountain Top University, they assessed the

instrument on two scale (relevant and not relevant), thereafter the CVI formular (CVI=n/N) was


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employed, which gave a value of 0.799, which indicated that the instrument is valid. The

reliability of the research instrument was tested through test-retest method. A pilot study was conducted whereby the instrument was administered on 25 employees of a manufacturing firm in

Lagos, the instrument was administered twice within an interval of two weeks, after which the outcome of the first study was correlated with that of the second and values of 0.919, 0.701 and

0.763 were obtained for knowledge creation, knowledge application and performance

respectively.

Model Specification The theory underpinning the model for this study is knowledge based theory

PERF= f(KM)………………………………………..(i) PERF= f(KC, KA)……………………………….(ii)

PERF= βo+ β 1KC+ β 2KA+ei………………………….(iii)

Where; Perf represents performance

βo is the constant term β 1, β 2, are the coefficient of the estimates

β 1, β 2, >0

KC =knowledge creation KA=knowledge application

e is the error term

The aprior expectation; it is expected that knowledge creation and knowledge application will both have positive effect on the innovative performance of manufacturing firms in Nigeria, hence

the parameters of knowledge creation and knowledge application should both have positive sign.(+)

Multiple regression analysis was employed in analyzing the data at 5% level of significance.

4. Result and Discussion

Table 4.1: Summary of result (Dependent Variable – Performance

Variable(s) Coefficient T-statistics P-Value

C 0.390 5.031 0.000

Knowledge Creation 0.540 7.931 0.000

Knowledge Application 0.704 11.041 0.000

F-Statistics = 38.981(0.0000) Adj. R-Square =0.625

The findings from Table 4.1 above revealed that the two components of knowledge management

adopted for this study have individual positive significant effect on manufacturing firms’ performance with coefficients and probability values of: knowledge creation (0.540, P-

Value<0.05) and knowledge application (0.704, P-Value<0.05). The F-statistics revealed that the two components of knowledge management adopted for this study have positive significant

combined effect on manufacturing firms performance in Nigeria (F-statistics= 38.981 < 0.05). The adjusted coefficient of determination (adjusted R2) of 0.625 implied that 62.5% variation in

manufacturing firms’ performance is explained by the combined knowledge management

components (knowledge creation and knowledge application).

5. Conclusion and Recommendations

This study examined the effect of knowledge management on the performance of manufacturing

firms in Nigeria, by employing two components of knowledge management (knowledge creation and knowledge application). Survey research design was adopted, through the administration of

structured questionnaires on 396 purposively selected staff of five manufacturing firms in South-West, Nigeria.


74

The findings revealed that the two components of knowledge management adopted for this

study have individual positive significant effect on manufacturing firms’ performance. The F-statistics revealed that the two components of knowledge management adopted for this study

have positive significant combined effect on manufacturing firms’ performance in Nigeria. The adjusted coefficient of determination (adjusted R2) suggest that 62.5% variation in

manufacturing firms’ performance is explained by the combined knowledge management

components.

It is therefore concluded that knowledge management components (knowledge creation and knowledge application) are important drivers of manufacturing firms’ performance. It is

recommended that manufacturing firms should embrace effective knowledge creation and application towards the enhancement of their overall performance.

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Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organizational

science, 5, 14-37. Retrieved from http://orgsci.journal.informs.org Nonaka, I. & Takeuchi, H. (1955.) The knowledge creating company: How Japanese companies

create the dynamics of innovation. Oxford, UK: Oxford University Press. Palacios –Marques, D., Soriano, D. R.J., and Huang, K.M.(2015).New information and

communication technologies for knowledge management in organizations. In 5th Global

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CUSTOMER RELATIONSHIP MANAGEMENT AND ORGANISATIONAL PROFITABILITY

IN NIGERIA BANKING INDUSTRY

OGUNKOYA O. A. (PhD) Department of Business Administration

Olabisi Onabanjo University, Ago Iwoye, Ogun State, Nigeria E-mail: [email protected]

Abstract This study investigated the impact of customer relationship management on organisational profitability in Nigeria banking industry. The major objective was to examine the impact of CRM on the profitability of Nigeria banks. The study made use of a survey research design, and employed evaluative quantitative analysis method. Analysis was based on cross sectional data generated through primary source, using questionnaire on a structured merger and turnover intentions scale and was administered to respondents. A total number of one hundred and forty eight (148) respondents were sampled from the population using stratified random sampling techniquefrom the selected banks. Regression models were specified, estimated and evaluated to examine the influence. The result showed that organisational profitability is influenced by 88.6% of customer relationship management, while the rest (100% - 88.6% = 11.4%) is explained by other factors. The study concluded that CRM has an effect as a strategy for gaining competitive advantage for the company and, perhaps the study hereby recommends that Nigeria banks should prioritize CRM projects so as to gains competitive advantage.

Keywords: Customer; Profitability; Relationship Management; Organisational Performance.

1.0 Introduction Fundamentals of business is developing and changing rapidly. Customers’ needs, organisational

strategies and competition led to this change. In time of industrial revolution, the main focus was

on the mass marketing and mass production. Today, customers’ needs were changing rapidly and they also change the processes of organisations. The old concept of business was product

oriented model of “design-build-sell” was changed to new customer oriented model by “sell-build-redesign” (Rygielski, Wang & Yen, 2002). At the same time the process of traditional mass

marketing process has undergone massive. In the old marketing concept, main focus was to

reach more and more customers. Yet, acquiring new customer is more resource consuming compared to retaining the existing ones.

Organisations realize that they don’t just focus on transactions as a means to showcase service

excellence and to consequently establish long-term relationship with customers. In recent years, organisations had to strategically decide the right way to build the long-term relations with

customer through different tools and techniques. Customer Relationship Management (CRM) is an important tool for attracting, acquiring, retaining and building strong relationship with

customers. Customer Relationship Management is a dual creation process in which information was captured, integrated, accessed then exchanged to create value for future customer from

current customer (Boulding, Staelin, Ehret & Johnston, 2005).

Today, CRM has become popular and organisations were investing in the implementation of CRM

system. In 2006 about 3.6 billion dollar worth of licensed global CRM software were purchased and it was increasing by 10.5 percent per year. This has grown to 6.6 billion dollar in 2012

(Haenlein & Kaplan, 2009). According to a study, from 2000 to 2005 organisations invested 220 billion dollars in CRM (Payne, 2006). Organisations are more concerned about their customers

and it increased the importance of customer relationship management. Customer relationship management capabilities are collection of different activities such as identification, acquisition

and retention of customers through customer interaction management. Up-selling and cross

selling are important activities to customer relationship improvement. The other activities of re-



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attracting and establishing relationship with dissatisfied or lost customer to win them back to the

organisation (Yonggui, Wang & Feng, 2012).

Technology revolution, particularly the World Wide Web was the biggest opportunity for the organisations to directly interact with their customers, customised their needs and provide

solutions to build, nurture and retain a strong long term relationship with them which was much more difficult offline. Through web-based interactions, firms offer high quality services (Winer,

2001). In low competition intensity industries, companies pushed their own ideas and they were

hardly interested in their customers’ views. Organisations were not interested in the long-term relationship with customers. The result is less customer satisfaction and reduced sales. Thus, if

the intensity of competition is higher than enhancing the relationship between the organisation and customer through internal organisational skills, it can understand customer needs.

Competition had increased due to globalisation and organisations were competing with each other for profit and market share. Organisations learn from one customer and strive to make

customers loyal. Customer, competition and company (the 3 C-s) play complementary roles in

this regard. It was impossible to perform better without any one among them.

Customer relationship management was not only associated with technology, it was a valued

combination of human, technology and process. Organisations who think that customer

relationship management is only a sales force software fail to implement customer relationship management or earn the benefits thereof. Understanding CRM and its capabilities fully is the key

to business performance as customer relationship management capabilities influence business performance positively. Competition intensity also enhances the relationship between customer

relationship management capabilities and business performance.

The general objective of this study is to examine the impact of customer relationship management on the profitability of Nigeria banking industry. The specific objective of the study is

to determine the effect of CRM practices on customer loyalty within Nigeria banking industry.

Answer will be provided to the following research question in order to achieve the objective of the study: What is the effect of CRM practices on customer loyalty within the Nigerian banking

industry?

The following hypothesis is formulated: H01: CRP has no significant impact on the profitability of Nigerian banks.

2.0 Literature Review

2.1 Customer Relationship Management

According to Winer (2001), Customer Relationship Management is the new Mantra of marketing. Most organisations have come up with products and services that can track customers through

the World Wide Web and be able to predict their future moves needs and wants. Kotler (2003) uses customer relationship management interchangeably with customer relationship marketing.

He says that customer relationship management’s aim is to produce high quality equity which he called customer equity. Rust et al., (2001) further distinguishes the three drivers of customer

equity, value equity, brand equity and relationship equity. Rust et al., (2001) described Value

Equity as the customers’ objective assessment of utility of an offering based on perception of its benefits relative to its costs. The sub drivers of value equity are quality, price and convenience.

Brand equity is the customers’ subjective and intangible assessment of the brand, above and beyond its objectively perceived value (Morgan & Hunt, 1994).

The sub-drivers of brand equity are customer brand awareness, customer attitude towards the

brand, and customer perception of brand ethics. Relationship Equity is the customer tendency to stick with the brand, above and beyond objective and subjective assessments of its worth (Rust

et al., 2001). Sub drivers of relationship equity include loyalty programs, special recognition and

treatment programs, community building programs and knowledge building programs. According to Berry (2003), Customer relationship management (CRM) consists of the processes that an


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organisation uses to track and organize its contacts with its current and prospective customers.

Wilson (2005) stated that the CRM software is used to support these processes; information about customers while customer interactions can be entered, stored, accessed and used by

employees in different organisation.

The primary goal of CRM, according to Gary and Greg (2002) is to improve long-term growth and profitability through a better understanding of customer behavior. CRM aims to provide more

effective feedback and improved integration to better gauge the Return on Investment (ROI) in

these areas.

2.2 Customer Retention

Unfortunately, most marketing theory and practice centers on the art of attracting new customers rather than on retaining and cultivating existing ones (Chen, 2000). Traditionally, the

emphasis has been on making sales rather than building relationships-: on pre-selling and selling

rather than caring for customers afterwards. The key to customer retention is customer satisfaction and organisations need to measure customer satisfaction regularly. A highly satisfied

customer stays longer, buys more and promotes the organisation for free to potential consumers (Lyu et al., 2000). The best thing an organisation can do is to make it possible for customers to

complain as this is the critical feedback the organization needs to improve its products and

services. According to Kotler (2008), of the customers who register a complaint, between 54 and 70 percent will do business again with the organisation if their complaint is resolved and the

figure can go to a staggering 95% if the customer feels that the complaint was resolved quickly.

Lyu et al., (2001) proposed that organisations should come up with several motto’s which can include:-

A customer is the most important person ever in the office whether in person, telephone,

or mail.

A customer is not dependent on us; we are dependent on him/her.

A customer is not an interruption to our work; he/she is the reason of it.

We are not doing him/her a favor by serving him/her; he/she is doing us a favor by giving us the opportunity to do so.

A customer is not somebody to argue or match wits with. Nobody ever won an argument

with a customer.

A customer is a person who brings us his wants.

It is our job to handle those wants profitably to him/her and to us (Lyu et al., 2001).

2.3 Measuring Customer Lifetime Value Customer Lifetime Value (CLV) is a concept for measuring customer retention rate (Lynette,

2008). CLV describes the present value of the stream of future profits expected over the customer’s lifetime purchases. The company must subtract from the expected revenues the

expected costs of attracting, selling and servicing the customer (Kumar, 2008). There are two

ways of strengthening customer retention, one is erecting high switching costs and the other is to deliver high customer satisfaction.

2.4 The Eight Building Blocks of CRM

According to Radcliff et al., (2001), “CRM needs a framework to ensure that programmes are approached on a strategic, balanced and integrated basis. Lyu et al (2001) introduce such a

framework to help enterprises implement “true” CRM and maximize benefits.” To achieve long term value of CRM, it is necessary to understand that it is a strategy that involves the whole

business and therefore should be approached at an enterprise level (Lyu et al., 2001). The main

reason enterprises are not implementing true CRM as Radcliff et al., (2001), observed is an inability to see the big picture and understand what is involved. Just as a map helps you

understand the context of your journey (the roads you need to navigate and alternative routes), so the CRM framework helps enterprises make decisions about the best route and objectives for

their situation.


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Following an analysis of several enterprises, Gartner (2009) has created a CRM framework, or

map, called “The Eight Building Blocks of CRM”. The eight building blocks in the model are the fundamental components for effective true CRM. Britt (2003) gave the first block as CRM vision.

This is a picture of what the customer centric enterprise should look like. Without a CRM vision, employees, customers and other stakeholders will not have a clear idea of: the value propositions

the company is offering, which customers it wants to have a relationship with, the importance

and benefits of CRM to the enterprise strategy and the nature of the customer experience to be delivered.

Kotler and Fox, (2005), gave the second block as CRM Strategy. This should be interwoven with

the marketing strategy and provide direction to other operational strategies, such as IT, HR and production. Kotler and Fox (2005) stated that the ultimate driver for all these strategies is the

corporate business strategy, which outlines how stakeholder value is to be delivered. Gary and Greg, (2002) gave the third block which is Valued Customer Experience. People tend to focus on

the things that they can understand and influence these things includes the technology, the

customer information, the processes or the organisation. The result is that most CRM initiatives are inwardly focused and provide little value to customers.

They fail to take into account that value must be created for both sides in relationship

management. Kumar (2008) commented that it is foolhardy to pretend that you understand customers without talking to them. Organisational Collaboration is the fourth block advanced by

Britt (2003). True CRM normally involves changing internal processes, organisational structures, compensation incentives and employees’ skills and behaviors. Gary and Greg, (2002) gave CRM

Processes as the fifth block. They stated that the relationship with the customer needs to be viewed and managed in terms of the customer life cycle and formalized processes must exist to

manage that life cycle. The next block, given by Lyu et al, (2001) is CRM Information. Customer

information is the key to CRM. It must be acquired, stored, analyzed, distributed and applied throughout the enterprise and potentially to its business partners in a timely manner.

The next block of CRM is the CRM technology. According to David and Malone (2002), CRM is not

just about technology, but the technology that enables the necessary analytical insight and operational interaction. Some consistency in the underlying hardware, software, networking and

telephony infrastructure is also required to aid integration, skills management and commercial management. Finally, the last CRM building block is the CRM metrics. Britt (2003) explained that

enterprises must set measurable, specific CRM objectives and monitor indicators if they are to

become customer centric. CRM metrics, according to Britt (2003), not only gauge the level of success, but also provide the feedback mechanism for continuous development of strategy and

tactics. In addition, they can act as a great tool for change management and are vital for the structure of employees’ incentives.

2.5 Effects of CRM on the Customer Loyalty

Oliver (2009) defines loyalty as a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same brand or same-brand

set purchasing, despite situational influences and marketing efforts having the potential to cause

switching behaviors. Although frequent usage and satisfaction with a product or service are frequently associated with loyalty, they by themselves insufficiently serve as indicators of loyalty.

A major goal of CRM is to capitalise on future opportunities presented by a core group of long-term customers. Two approaches for retaining these customers have been loyalty programs and

cross selling. Loyalty programmes play an important role in retaining customers and linking the

business to future opportunities. The objective of a loyalty program is to build a positive attitude toward a brand and provide the customer with an incentive to patronise the product, service or

brand.


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A successful programme will decrease its members’ purchase of non-programme brands and

increase their allocation, repeat -purchase rates, usage frequency, propensity toward exclusivity and switching to program brands (Sharp & Sharp, 2007) Prior studies have found that the

development of loyalty programs in CRM, frequently leads to increases in repeat-purchases and profitability (Reichheld & Sasser, 2000), decreases to price sensitivity (Reichheld, 2006), and

raises barriers of entry to markets by making it difficult for new entrants to court customers away

from existing businesses (Sharp & Sharp, 2007). Furthermore, loyal customers tend not to consider alternatives or shop for lower prices (Goodwin & Gremler. (2006). The market research

studies of Sharp and Sharp (2007) and Reichheld and Sasser (2000) strongly suggest that loyalty programs can increase business revenue and total customer market share.

2.6 Theoretical Framework

2.6.1 Customer Relationship Model A major purpose of this paper is to provide a managerially useful, end-to-end view of the CRM

process from a marketing perspective. The basic perspective taken is that of the customer, not

the organisation. In other words, what do managers need to know about their customers and how is that information used to develop a complete CRM perspective? The basic model proposed

by different proponents contains a set of 7 basic components. This is the foundation for any customer relationship management activity (Perrine & Ricard, 2005). For Web based businesses,

this should be a relatively straightforward task as the customer transaction and contact information is accumulated as a natural part of the interaction with customers (Kumar, 2008). For

existing brick and mortar organisations that have not previously collected much customer

information, the task will involve seeking historical customer contact data from internal sources such as accounting and customer service (Lynette, 2008).

Rogers and Peppers (2001) gave the second component as analysis of the database. As a result,

a new term, lifetime customer value or LCV, has been introduced into the lexicon of marketers (Rogers & Peppers, 2001). The idea is that each row/customer of the database should be

analysed in terms of current and future profitability to the firm. When a profit figure can be assigned to each customer, the marketing manager can then decide which customers to target.

According to Wayland et al (2007) after the analysis of customer database, the next component

is to consider which customers to target with the firm’s marketing programs. William et al (2008)

also stated that the marketing manager can use a number of criteria such as simply choosing those customers that are profitable (or projected to be) or imposing an ROI hurdle. The goal is to

use the customer profitability analysis to separate customers that will provide the most long-term profits from those that are currently hurting profits. This allows the manager to “fire” customers

that are too costly to serve relative to the revenues being produced (William et al, 2008).While this may seem contrary to being customer-oriented, the basis of the time-honored “marketing

concept,” in fact, there is nothing that says that marketing and profits are contradictions in terms

(Wayland et al, 2007).

Another component is the tools for targeting the customers. According to Wang and Mowen

(2007), mass marketing approaches such as television, radio, or print advertising are useful for

generating awareness and achieving other communications objectives, but they are poorly-suited for CRM due to their impersonal nature. More conventional approaches for targeting selected

customers as Wang and Mowen (2007) suggested include a portfolio of direct marketing methods such as telemarketing, direct mail, and, when the nature of the product is suitable, direct sales.

Another component is how to build relationships with the targeted customers. According to

Rogers and Peppers, (2001), CRM is more of a technique for implementing CRM than a program itself. Relationships are not built and sustained with direct e-mails themselves but rather through

the types of programs that are available for which e-mail may be a delivery mechanism. The overall goal of relationship programs is to deliver a higher level of customer satisfaction than

competing firms deliver (Kumar, 2008). A comprehensive set of relationship programs includes: -


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customer service, frequency/loyalty programs, customization, rewards programs and community

building.

Another component as per Perrien and Ricard (2005) is privacy issues. The CRM system described in this paper depends upon a database of customer information and analysis of that

data for more effective targeting of marketing communications and relationship-building activities. There is an obvious tradeoff between the ability of companies to better deliver

customised products and services and the amount of information necessary to enable this delivery (Perrien & Ricard, 2005). Particularly with the popularity of the Internet, many

consumers and advocacy groups are concerned about the amount of personal information that is

contained in databases and how it is being used (David & Malone, 2002).

Thus, the privacy issue extends all the way through the hierarchy of steps. The last component is the metrics for measuring the success of the CRM program. Wang and Mowen, (2007) stated

that the increased attention paid to CRM means that the traditional metrics used by managers to measure the success of their products and services in the marketplace have to be updated.

Financial and market-based indicators like profitability, market share, and profit margins have been and will continue to be important. However, in a CRM world, increased emphasis is being

placed on developing measures that are customer-centric and give the manager a better idea of

how her CRM policies and programs are working William et al, (2008).

3.0 Methodology

The study used a survey research design method. The required data for the study was a cross

sectional data obtained from primary sources. A structured undisguised questionnaire was administered as a part of collecting primary data. The questionnaires are developed to collect the

information separately from staff of the select Nigeria banks. The population of the study would consist of the members of staff in Nigeria banking industry. The study area of this research is

Nigeria banks in Ebute-Metta, Lagos State. The Nigeria banks for this research are Guarantee

Trust Bank and Access Bank with the total population of 235 employees respectively (NSE Factbook, 2018).

The sample size was determined by adopting Yaro Yamani’s (1998) formula.

n = S 1+S (α)2

Where: n = sample size S = population size

α = margin of error

i.e S = 235; α = 5% (0.05).

A total number of one hundred and forty eight (148) respondents were sampled from the population using stratified random sampling technique with various department divided into

strata. It was believed that this size was adequately representing the population in various departments and top management staff in the banking industry. This study used a purposive

and simple random technique sampling procedures. The sample was divided into strata according

to the percentage number of staffs in the banking industry. The respondents were then randomly selected in each stratum to determine the final sample size. The questionnaires were

administered among the respondents that were randomly selected across the banking industry in Nigeria under review.

For this study, the analytical techniques employed in analysing the data collected from the

respondent were the Simple Percentage Analysis. The descriptive statistics of the data is shown below:


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Table 3.1: Descriptive Statistics of the Data

Gender Male Female

58.0% 42.0%

Age of Respondents 21-30 yrs 31-40 yrs 41-50 yrs 51 yr and Above

32.0% 44.0% 12.0% 12.0%

Marital Status Single Married

36.0% 64.%

Education HND B.Sc M.Sc

30.0% 46.% 24.0%

Position Junior Staff Senior Staff 58.0% 42.0%

Working Experience 0-5 yrs 6-10 yrs Above 11 yrs

16.0% 58.0% 26.0%

Sources: Field Survey (2019)

3.1 Hypothesis Testing Ho1: CRP has no significant impact on the profitability of Nigerian banks.

Model Summaryb

Model R R Square Adjusted R

Square

Std. Error of

the Estimate

Durbin-Watson

1 .941a .886 .854 390500.779 1.904

a. Predictors: (Constant), CRM

b. Dependent Variable: PR

Author’s Survey (2019)

The table above shows that the value of R = 0.941 and the coefficient of determination (R Square) of 0.886. This suggests the notion that organisational profitability is influenced by 88.6%

of customer relationship management, while the rest (100% - 88.6% = 11.4%) is explained by

other factors. The Durbin-Watson figure 1.904 is close to the value of 2.0. Therefore, there is no problem of serial correlation in the model. Hence the model is good and can be used for

prediction. There is no auto-correlation since the residuals are not serially correlated.

4.0 Discussion and Implications for management Based on the findings of the study, the following main conclusions were made for the impact of

Customer Relationship Management on organisational profitability in Nigerian banking industry. In regard to the impact of CRM on organisational profitability in Nigeria banking industry, it was

noted that a majority of the respondents felt that CRM increased customer confidence in their

products, increased repeat purchases, improved customer confidence in the organisation, enhanced customer relationships with the organisation and its programs and improved how

customers view the organisation in general. Therefore, organisation should take note that it was also found that on the effect of CRM on customer loyalty, a majority of the respondents felt that

CRM increases customer confidence in the products, increases responsiveness to marketing

campaigns, improves customer confidence in the organisation, enhances customer confidence to the company’s programs and improves how customers view the organisation in general.

On the perspective that competitive advantage can lead to long-term sustainable profitability, a

majority of the respondents felt that it promotes the overall image of the organisation hence customer loyalty, enhances customer loyalty by enhancing organisational culture, enhances

innovations in the organisation, hence customer loyalty, enhances coordination between organisation and its customers and finally through value addition, the organisation is able to


83

increase its market base. This study therefore concludes that CRM has an impact on

organisational profitability in Nigerian banking industry.

On the basis of the conclusion, the following recommendations were made for impact of CRM on organisational profitability in Nigerian banking industry. There is need for Nigerian banks to

invest in CRM as a long-term strategy in gaining competitive advantage against competitors. Result from of this research suggests that Nigerian banks should prudently and efficiently utilize

revenues generated from students in the privately sponsored programmes. The banks should

prioritize the projects being undertaken to ensure that the banks gains a competitive advantage from its strategies. This will greatly enhance customer perception and encourage openness and

good relations with the customers and staff. It is further recommended that all CRM projects should be acknowledged as a major strategy in ensuring companies keeps in touch with their

staff and also keeps track of their customer records of purchases, contacts and other related activities. Conclusively, the impact of CRM on organisational profitability and customer retention

in Nigerian banking industry is huge, Nigerian banks should take it seriously and invest in it.

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Rogers and Peppers, (2001), The Relationship-Base Enterprise: Powering Business Success

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Appendix S/N STATEMENTS. SA

%

A

%

UN

%

D

%

SD

%

1. CRM increases customer confidence in the products 55.0 35.0 2.5 5.0 2.5

2. CRM increases responsiveness to marketing campaigns 62.5 30.0 2.5 5.0

3. Customer loyalty promotes the overall image of the

organization

60.0 32.5 5.0 2.5

4. CRM increased customer confidence in their product 55.0 35.0 5.0 2.5 2.5

5. CRM increased repeat purchases 35.0 52.5 8.0 5.0

6. CRM improves customer confidence in the organization 52.5 35.0 2.5 7.5 2.5

7. Organization value is able to increase its market base 5.0 2.5 52.5 40.0

8. Customer loyalty enhance organisational culture 60.0 32.5 2.5 5.0

9. CRM enhanced customer relationships with the organization 55.0 30.0 2.5 5.0 7.5

10. Customer loyaly enhances coordination between organization

and its customers

50.0 27.5 10.0 7.5 5.0

11. CRM improved customer confidence in the organization 32.5 40.0 7.5 7.5 12.5

12. CRM improved how customers view the organisation in

general

22.5 62.5 5.0 7.5 2.5

13. Customer loyaly enhances innovations in the organization 42.5 37.5 7.5 7.5 5.0

14. CRM improves how customers view the organisation in

general

55.0 37.5 2.5 2.5 2.5

15. 7.5 5.0 50.0 37.5

16. CRM enhances customer confidence to the company’s

programs and

55.0 40.0 2.5 2.5


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IMPACT OF BRANDING ON CONSUMER BEHAVIOR IN THE NIGERIAN MARKET CASE

OF CONSUMABLE GOODS. (NESTLÉ NIG PLC, LAGOS-STATE)

1Akinremi Babatunde Rasheed

Department of Marketing,


Email: [email protected]

2Chuks Onwuluri, Ogun State Institute of Technology,

Igbesa, Ogun State. Email: [email protected].

3Omoare Emma. O,


ABSTRACT Impact of product branding on consumer behavior, has a significance effect on consumer brand loyalty towards purchasing process. This study employed a descriptive survey design. A sample size of 300 respondents was selected using simple random sampling technique of which 300 respondents filled and returned the questionnaire. Data from the questionnaire was analyzed using special software for statistics which is called statistical package for social science (SPSS) version 20.the result of the study found out that branding of product should go along with product trademark. Also branding should be seen as an instrument for appealing to target consumer rather than cost center. The study recommends that management invest effectively on branding of product which will have impact on the consumer behaviour.

Keywords: Consumer behavior, Nafdac, Packaging, SON, Trademark.

Introduction One of the goods of an organization is to create a story brand. A wide array of benefits that

accrue to organization as a result of branding include reduced risk, greater profit cooperation with other parties as well as the opportunities for brand extension.Thus an organization needs to

critically assess factors that will strengthen its brand in the market place. Branding is a

favourable image in the minds of consumers for the purpose of effective demand (Asker 1997) Branding is also regarded as opinion of consumer confidence in the quality of products produced

by organizations and organizational honesty in the products offered to consumers (Aaker, 1997; Cannon, Perreault, & McCarthy, 2009). In the analogy stated that if a consumer think that the

organization has a consumer oriented perspective, so consumers have confidence in the brand over the image of the brand owned by the organization (Delgado-Ballester & Munuera-Aleman,

2005). Most studies such as done by Srivastava, Fahey and Christensen (2001) considered brand

trust as a market-based assets that are interconnected.

And externally related to the consumer of the branded. In addition Morgan & Hunt (1994) stated

that relationship marketing between firms and customer is based on trust customers; trust in the

brand created a favourable demand response In order to manage its brand, firms need to satisfy customers desires. Brand has greater impact

on consumer buying behavior. In Addition, attitudes, values and environment of consumers are factors that influence consumers buying behavior in relation to a particular brand in the market

place. Although, there exists many researches on branding as it affects consumer behavior, but it

is worthy of note that Quality of service and products has not been taken as a moderating factor for both branding and customer's behavior. This is a gap that needs to be looked in upon, as

service is an integrating factor for branding. It is on this effect that the study tends to investigate the effect of branding on consumer behaviour.




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Statement of Research Problems

Consumers have their attributes and forces behind before and during the process of purchasing branded goods/product. If customers trust a brand quality it makes a positive connection to the

brand and customers will have a reason to become a loyal to the brand. Loyalty and trust of the customers is very important for a company because it reduces the chance of attack from

competitors (Aaker, 1996). In this increasable competitive market, companies are attempting to

gain better position for them by becoming more customer-oriented (Hartmann, 2007). Companies are facing wider range of competitors who offer a similar product to same customers

at different prices (Kotler, 2005). Usually most of products lack differentiation, competitors and potential competitors are also like to copy what the leading company does. Usually we get

information and knowledge during our life. This depends on our judgment and beliefs. As things

like education, work and other factors have a continuous influence on human life. Human judgment and beliefs change over time. A good strategy differentiates company brand to other

competitor’s brands. The intention to offer marketing package for consumer benefits by a marketer is to win the competition by creating new and decisive consumer value (Welibacher,

1993).

Specifically, the core issue the study is to address is the issue of company quality and brand with respects to consumers perception and choices. It is imperative to note that consumer

choices on a product is affirmed to the inherent quality that can be found. Thus, giving a

prestige quality and influencing consumer choices are major challenges that if properly addressed could lead to organizational profitability and increased customers satisfaction. It is

on this note, that the study stands out to achieve the impact of branding on consumer behavior with a study of Nestle Nigeria PLC.

Objectives of the study

The main objective of this study is to determine the relationship between branding on consumer behavior in the Nigeria market. The specific objectives are.

1. To find out if there is a significant relationship between branding and consumer behavior

2. To examine if there is a significant correlation between brand quality and consumer behavior

Research Questions

Based on the above stated research objectives it is therefore imperative to ask the

following research questions: 1. Is there a significant relationship between branding and consumer behavior?

2. What correlation exists between brand quality and consumer behavior?

Research Hypotheses In line with the above research Objectives, the following alternative hypotheses are formulated:

H01: There is no significant relationship between branding and consumer behavior. H02: There is no correlation existing between brand quality and consumer behavior.

Significance of the Study

This study is exploring the relations between variables that affect the buying decision of consumer on brands. Understanding of variables such as price, quality, brand name and

societal status if are able to help further understand how these variables affect the choice

making of consumer. This study help the present Marketing Managers to better reposition their brands and advertising strategy to capture the correct target market to improve the

sales in times where economy is at a challenge.

2.1 Literature Review 2.1.1 The Concept of brand and branding

The term brand has been defined severally by different researchers. A brand is a comprehensive term or concept. It encompasses name, word, design, symbol or combination of these elements

that distinguishes one product from another. Ind [2007] defined a brand (or corporate) brand as


87

the values that defines an organization; it is not just the logo of the organization, name or visual

appeal or presentation. According to Sawant [2012], a brand is a description of a package of value, on which consumers can rely to be consistently the same or better over a period of time.

Sawant [2012] further added that, branding is the process of stamping a product or groups of products or any anything offered by the marketer, with an idenfying name and mark or

combination of both. Branding thus works as a signal that allows consumers to immediately

recognize a product as one they are familiar with or one they like. It is a memory cue. It allows consumers to retrieve relevant information from memory. Hestad [2013] notes that brand

enables consumers to make decisions. Consumers stick to or recognize certain brands and purchase them due to their previous experiences with such brands or what such brand promises

to offer. Ind [2007] adds that, a brand is more than what a product is. Consumers see a brand

as an essential element of a product or service and it does add value to the latter. Consumers do attach meanings and interpretations to a brand due to the services or satisfaction it promises

to deliver. Thus branding according to Xie and Boggs [2006] is “the strategy in which a brand and corporate name are the same” . Corporate branding implies business communication with

government, the financial sector, the labour market, and the labour market. For the purpose of this study, the author does not attempt to distinguish between corporate brand and

product/service brands. The researchers perceives the two as one.

Extant literature has identified certain key attributes of strong or successful brands. For instance,

according to Li, Li and Kambele [2012], successful brands are different from all other products or brands. They set themselves apart from all other brands available on the market. To this Ocass

and Frost [2002],argues that, brands that are perceived by stakeholders as being different have much higher potential for growth than other brands available on the market. This

notwithstanding, Li et al [2012], argues that, brands do not just have to be different, they must be perceived to be different in a meaningful way to customers or consumers. Functional product

or service benefits may not be enough to set brands or products apart in the market, however,

other product attributes such as product offering, how the brand communicates, the type of consumers targeted, or the price offering can set brands apart. Strong brands communicate the

strategic intent of the organization to its stakeholders. For instance, Ind [2007] notes that strong or successful brands define an organization. Consumers attach meanings and interpretations to

brands due to the services or satisfaction they deliver.

2.1.2. Brand Image

Since 1950s, “Brand Image” becomes a significant concept for customer’s behavior research. The brand image is a glass reflection of the brand personality. Keller's was proposed by Aaker

who defined that“brand image is stated as a set of associations, which are organized in some meaningful way”. Brand image is developed from consumer interpretation, whether emotional

or logical. According to Hsieh, Pan, and Setiono (2004), "a successful brand image allows consumers to recognize the needs that the brand satisfies and to distinguish the brand from its

competitors, and increases the probability that consumers will purchase the brand" (p. 252). A

company’s product or services can gain a better position in the market, sustainable competitive advantage, and increase market share (Park, Jaworski, & MacInnis, 1986).Hence several

empirical findings have confirmed that a favorable image will lead to brand equity(Aaker, 1991;Alford, 2001; Biel, 1992; Capella1992, Faircloth 1992, Keller, 1993, loyalty(e.g

Kandampully 2000, Koo, 2003; LeBlanc, 1998,Nguyen 1998,Suhartanto, 2000 purchase

behavior, (Hsieh et al., 2004) and brand performance (Roth, 1995). Reynolds (1965) noted that "an image is the psychological conceptestablished by the consumer on the basis of a few

particular impressions among the total impressions; it comes into being through an innovative process in which these selected impressions are expanded, exaggerated, and systematic"

(p.69). Kotler (2001) defined image as "the set of impressions, beliefs and ideas that a person holds about an object" (p. 273). On the other hand, Keller (1993) considered brand image as "a

set of perceptions related with brand associations in consumer's memory" (p. 3).


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Aaker (1991) proposed a similar definition to Keller; brand image is referred to as "a set of

associations which are generally systematized in some meaningful way" (p. 109). However Biel (1992) defined brand image as "a cluster of associations and attributes that consumers

associate to the brand name" (p. 8). Past purchasing experiences and familiarity with the brand can generate consumer perception and can enhance their buying decision (Aaker, 1991). Brand

image plays an important role in customer’s perception about overall quality of a product or

service (Aaker, 1991; Keller, 1998; Yasin, 2007).

2.1.5. Consumer Perception and Consumer awareness Many studies have been done on consumer perception and awareness about brand. Keller

(1993; 1998) described consumer perceptions about brands as brand knowledge, which consist on brand image and brand awareness. Hence according to Keller Brand awareness means

recognition and recall of brand. Brand Image is defined as, “a perception about a brand which is reflected by the brand associations and it is held in consumer memory ” (Keller). These

associations are related with attitude towards brand and brand quality. Similarly, Aaker (1991,

1996) refers that brand associations are anything which are related to consumer’s memory. Not only creating the brand image is important but also maintaining brand imageis an essential part

of a firm's marketing program (Roth, 1995) and branding strategy (Keller, 1993; Aaker,1991)Band image also related with the prestige and non-prestige of product K Amna & S

Sood (1999). Wright and Lynch (1995) stated that the general knowledge of consumers about

the product and their buying decision put great impact on brand image because brand image is directly related with the product and is very essential element of product also they said” image

always define the reality of product ” . McFadden (1974) argued that a brand can sustain for a long time if its image help consumer in his buying decision for the first time. Brand image plays

an important role in customer’s perception about overall quality of a product or service (Aaker, 1991; Keller, 1998; Yasin, 2007). Brand serves a fundamental role for differentiating goods and

services from those of the competitors (Aaker, 1991; Murphy, 1998). The development of brand

equity underlies the importance of brand in marketing strategies and hence provides clear understandings for managers and further research (Keller, 2003).

2.1.6. Consumer Behaviour: An Overview

A plethora of theories and concepts have been proposed or propounded to help better understand the purchasing behaviour or intentions of consumers. Mowen and Minor [2001] argue

that consumer purchase decisions are the end products of a series of processing results from

perceiving problems, searching for solutions, evaluating alternatives or alternative solutions and making a choice out of the many identified alternative solutions. One of the most recognized

models of consumer purchaseintentions is that of [Engel, Blackwell & Miniard, 1995]. Kotler et al (2004) agrees with the mthat consumer purchase decisions or intentions are not a spontaneous

activity but rather aseries of activities. According to their model, there are five main stages of consumer purchase decisions. These are: problem recognition, information search, alternative

evaluation, purchase decision and post-purchase behaviour. Kotler et al [2004] however notes

that, consumer purchase decisions or intentions further be divided into three, that is, unplanned purchase intention, partially planned purchase intention and fully planned purchase purchase

intention or buying. With the unplanned purchase intention or buying, also known as, impulse buying, the consumer makes all decision(s) to purchase a particular product or brand of

product(s) upon reaching market or store. The partially planned purchase intention or buying

implies that, the consumer only makes a decision to purchase a category or categories of a product or products well ahead of time. However, the brand or type of product(s) to be

purchased are decided on the market or shop. This means that, unlike the unplanned buying, with the partially planned, the consumer or customer only decides on the brand unpon reaching

the market or shop. However, with a fully planned buying or purchasing, the consumer decides on the product type as well as the brand before going to the market or entering the shop.


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2.1.7 Brand and Consumer Purchase Behaviour

Extant literature has highlighted the importance and significant relationship between brand and consumer purchase behaviour. Several studies conducted by researchers have revealed

significant positive relationship between brand and consumer or customer purchase behaviour [Macdonald et al, 2000: Ocass & Dust, 2002: Weiwei, 2007]. For instance, examine consumer

perceptions on best known brands Zhan and He [2012] argue that consumers evaluate the best-

known brands more favorably as they become more value conscious, indicating that luxury products are not necessarily extravagant purchases. Thus value-conscious consumers or

customers are most inclined to benefit cost ratio and therefore tend to exert extra effort to seek products or brands that offer the best values. A similar study by Chen and Chang [2008]

revealed that there is a significant positive relationship between brand equity and consumer

purchase intentions. They added further that, the impact or relationship between brand equity and customer purchase intention is low for consumers with low switching costs. Strong brands

can increase customers or consumers’ trust in the produce or service purchased and enabling them to better visualize and understand intangible factors. To this Yoo and Donthu [2001] notes

that brand image can influence a customer or consumer’s willingness to pay premium price and hence impact positively on a company’s future profitability and long-term cash flows. In their

paper, Cobb-Walgren, Ruble and Donthu [1993] developed a framework for studying the vatious

antecedents and consequences of brand equity from customer perspective. They suggested that a customer or consumer’s perception of a product or brand contributes significantly to brand

value or brand equity.

2.2. Empirical review on impact of branding on consumer behavior It is believed that branding or re-branding, with a new name or logo does not come cheap and

should therefore be handled with utmost care and precision lest it amounts to a total waste of money and other resources. (Lead Edge, 2005) asserts, based on the result of its survey that the

value of a strong brand lies in the impression left with anyone who comes into contact with the

organization. They further opined that the most compelling reasons for effective branding is to achieve customer loyalty and support apremium price because purchasers rely on experience

and their long held attitudes about a brand; and that successful brands are often focused on one specific market segment.

For another authority (Beyond Marketing Thought, 2007), a most effective branding, entails a

memorable name and a ubiquitous slogan combined with an instantly recognizable and unique logo. It recommended a simple and straight forward logo or potentially, an elaborate design of a

simple idea, such as a silhouette of a person or an object. It further identified the brand name as

another crucial element of branding which should be both simply memorable and is particular to a firm or product.

Daye, VanAuken and Asacker(2008) identified color as a critical element in developing a branding strategy. They opined that a firm needs to be wise in considering what they called the

psychology of color when designing their marketing materials. They asserted that colors not only

enhances the appearance of the item they also influence customer behavior. They further said that the color of your brand may make or mar our branding strategy while pointing out that

effect of colors differs; from culture to culture. (Roll, 2008) recommends that firms should rather concentrate on having a brand portfolio which usually refers to the firms set of related brands

and/or products. According to him, the traditional logic behind having a portfolio of brands rather

than a single brand has been possible diversification and risk minimization. He however advised that the days of a firm having one leading star brand and others of low quality merely following

have gone and that all brands in the portfolio must be made to compete for leadership.

In the words of (Lindstrom, 2008), there are three pronged approaches to developing an effective branding strategy namely, determine which audience to focus on, determine what

message your brand should convey and finally, determine what creates the brand. He further


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opined that a brand must have a clear audience focus, value focus and tone-of-voice focus with

which to deliver its well-honed message.

Kim and Chung(1997) researching on brand Popularity, Country Image and Market Share believes is thatcompetition among brands has become more complicated as the number of

brands originating from foreign countries increases. They identified two concepts (brand popularity and country-of-origin-image) as being key variables for the long-term success of

brands or firms in global markets. They strongly believe that these two factors interact with other

marketing variables in influencing brand performanceand by extension acceptance by consumers. Suffice it to say here that what country-of-origin image does for brand performance in the global

market is what company-of-make-image does in the domestic market. Again, brand popularity is an important factor in market performance both in the global and domestic market.

Okpara(2007), studying brand popularity and company-of-make cognitions of major consumer

brands in the Nigerian youth market, had its main objective as finding the impact of popularity and company-of-make on consumer choice. The research surveyed a total of 1200 respondents

(students) chosen from universities in the southeast, Nigeria and came to the conclusion that 100% of the respondents do not know all the manufacturers of even their favorite brands, with

females being more brand loyal than males. This research went further to observe that majority

of first choice brands in the market are from Multinational companies. On the strength of this finding, the study recommended that corporate bodies should intensify promotional campaigns

on the company more than on the individual brands (institutional as against brand advertising).

Adirika, Ebue & Nnolim((2000) recorded the outcome of a study on branding carried out on Taiwanese manufacturers who produce a great amount of the worlds clothing, consumer

electronics and computers but not under Taiwanese brand names. The result of the study showed that marketing Power lies with the brand-name companies and not with actual

manufacturers. This is because brand name companies can replace their Taiwanese

manufacturing sources with cheaper sources in Malaysia and elsewhere and still retain their market shares. This study only goes to portray the fact that consumers are more susceptible to

brand names rather than quality.(Okpara, 2008) studying the Attitudinal Dimensions to Home brands of shoes as compared to foreign brands discovered the presence of what he termed

Consumption Complex Syndrome (CCS) as being responsible for local consumers preference for

foreign branded shoes over the local branded counterparts. Okpara’s model suggests that once consumers are exposed to the awareness andknowledge of a brand of product, they either like or

dislike it. Allusion to Consumption Complex Syndromesuggests that when a consumer asserts preference for a particular brand of shoe (foreign) and cannot ina blind brand experiment clearly

pick out that brand, then he possesses the syndrome. This simply suggests that what consumers

buy most times is name and not quality. This, one believes may equally be true of consumers of regulated bottled water who cannot determine in a blind brand experiment their choice brand.

2.2. Theoretical framework of the study. The core theory that this study will emphasized on is the Marshallian economic model, the theory

states that consumers will be willing to spend more on goods that provide greatest satisfaction

and of high quality. The adoption for this theory is based on the fact that it emphasizes more on consumer behavior through elements such as branding, quality and customer satisfaction. A

detailed explanation of this theory is as given below:

2.2.1. The Marshallian economic model According to the Marshallian economic model, individual buyers will spend their income on goods

that will offer the greatest satisfaction, depending on their taste and the relative prices of goods. The antecedents for the Marshallian theory can be traced back to both Adam Smith and Jeremy

Bentham. In accordance with a doctrine of economic growth developed by Smith, man is said to

be motivated in all his actions by self-interest.


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Bentham, who viewed man as carefully calculating and weighing expected pains and pleasures of

every contemplated action, refined this view. By the time Bentham's theory was applied to consumer behaviour late in the 19th century, the "marginal-utility" theory of value was

formulated independently and almostsimultaneously by Walras in Switzerland, Menger in Australia and Jevons and Marshall in England (Kotler,in Gould; 1979: 35).

The theoretical work of Alfred Marshall, who was the consolidator of the classical and neo-

classical tradition in economics aimed at realism, is founded in his method to examine the effect

of change in a single variable, for example price, when all other variables were held constant, based on simplified assumptions. In the quest for greater realism, Marshall "reasoned out"

consequences of the provisional assumptions and modified his assumptions in subsequent steps.

Marshall's methods and assumptions have been refined to the Modern Utility Theory, where the economic man maximises his utility and does this by carefully calculating the ''felicific''

consequences of any purchase. Runyon & Stewart (1987: 695) add to the discussion by stating that Marshall used money as the common denominator of psychological needs, where the value

of satisfying a specific need could be equated and compared with other needs in terms of cost.

2.2.2. Marketing applications of the Marshallian model

The value of the Marshallian model for the purposes of behavioural science can be viewed from a number of different viewpoints (Kotler, in Gould; 1979: 35-36). One point of view is that the

model is tautologicaland therefore neither true nor false. The model is also not very informative because it simply portrays the buyer as acting in his best interest.

A second view is that the model provides logical norms for buyers who want to be "rational",

therefore it is a normative rather than a descriptive model of behaviour. The consumer is not likely to employ an economic analysis for all purchases, but is rather selective in using an

economic theory. A consumer may therefore not use the economic principles for choosing

between two low-cost products but may apply an economic analysis when deciding to purchase a new house or car.

A third view is that economic factors should be included in any comprehensive description of

buying behaviour, since economic factors operate, to a greater or lesser extent, in all markets.

The Marshallian model provides a number of useful behavioural hypotheses. The first hypothesis

offered is that the lower the price of a product, the greater the sales will be for that product. A

second hypothesis is that the lower the price of a substitute product is than that of a specific product, the greater the sales of the substitute product will be.

Third, the sales of a product will be higher, provided it is not an inferior product, if the real

income is higher. The last hypothesis states that greater volumes of sales will follow as promotional expenditure is increased.

It should be noted that these hypotheses are intended to describe the average effect and do not

attemptto class all individuals' actions as continuously calculating the economic impact during purchase decisions.

As a final comment to the Marshallian model, it can be concluded that economic factors alone

cannot explain all variations in the sales and buying process and also that the fundamentals of how brand and product preferences are formed are ignored in this theory. The model offers a

useful frame of reference for analyzing only a small portion of the consumer's psyche.

METHODOLOGY The study is a descriptive research and the population of study is the management staff of firms

producing consumable goods in Nigerian market as well as their distributors. However, for the purpose of study, a sample size of 300 was determine adopting the taro Yamane method with

the aid of stratified sampling techniques. Prompting the choice of the population. However, a


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sample size of 300 was determined using the simple random technique. This study is expected to

produce both quantitative and qualitative data. Once the questionnaires are received they were coded and edited for completeness and consistency. Quantitative data was analyzed by

employing descriptive statistics and inferential analysis using statistical package for social science (SPSS) version 20. This technique gives simple summaries about the sample data and present

quantitative descriptions in a manageable form, Gupta (2004). Together with simple graphics

analysis, descriptive statistics form the basis of virtually every quantitative analysis to data, Kothari (2004). The significance testing was done at 5% level of significance and SPSS was used

for this purpose. The data was then presented using frequency distribution tables, bar charts and pie charts for easier understanding

FINDINGS

A total of 350 Questionnaires (representing 100%) were distributed, in which 300 was returned, a percentage of which is 85%. However, the returned Questionnaires are however shown below:

Consumer Choice.

Frequency Percent Valid percent Cumulative percent

Valid strongly agree

90 30.0 30.0 30.0

Agreed 122 40.7 40.7 70.7

Undecided 49 16.3 16.3 87.0

Disagreed 29 9.7 9.7 96.7

Strongly disagreed 10 3.3 3.3 100.0

Total 300 100.0 100.0

Source: Field survey (2019). The table shows that 30% of the respondents strongly agreed that Branding influences consumer

choice, 40.7% of the respondents agreed to the contrary, 16.3% of the respondents are unsure,

9.7% of the respondents disagreed to the subjected matter and 3.3% of the respondents strongly disagreed. This implies that majority of the respondents agreed that Branding influences

consumer choices.

Consumer Behavior are better influenced when advertising is in place


Valid strongly

agree

74 24.7 24.7 24.7

Agreed 171 57.0 57.0 81.7

Undecided 30 10.0 10.0 91.7

Disagreed 21 7.0 7.0 98.7


Total 300 100.0 100.0

Source: Field survey (2019).

The table shows that 24.7% of the respondents strongly agreed that Consumer Behavior are better influenced when advertising is in place, 57% of the respondents agreed to the contrary,

10% of the respondents are unsure, 7% of the respondents disagreed to the subjected matter and 1.3% of the respondents strongly disagreed. This implies that majority of the respondents

agreed that CSR investment activities influences creation of firm value.


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To a great extent Packaging of products affects consumer preferences



117 39.0 39.0 39.0

Agreed 132 44.0 44.0 83.0

Undecided 33 11.0 11.0 94.0

Disagreed 14 4.7 4.7 98.7


Total 300 100.0 100.0


The table shows that 39% of the respondents strongly agreed that to a great extent packaging of products affects consumer preferences, 44% of the respondents agreed to the contrary, 11% of

the respondents are unsure, 4.7% of the respondents disagreed to the subjected matter and 1.3% of the respondents strongly disagreed. This implies that majority of the respondents agreed

that to a great extent packaging of products affects consumer preferences.

Branding, if properly managed increase organizational profitability



111 37.0 37.0 37.0

Agreed 137 45.7 45.7 82.7

Undecided 29 9.7 9.7 92.3

Disagreed 15 5.0 5.0 97.3


Total 300 100.0 100.0

Source: Field survey (2019). The table shows that 37% of the respondents strongly agreed that Branding, if properly

managed increased organizational profitability, 45.7% of the respondents agreed to the contrary, 9.7% of the respondents are unsure, 5% of the respondents disagreed to the subjected matter

and 2.6% of the respondents strongly disagreed. This implies that majority of the respondents

agreed that CSR, if properly managed increased organizational profitability.

Branding is known to be associated with trademark


Valid strongly

agree

120 40.0 40.0 40.0

Agreed 119 39.7 39.7 79.7

Undecided 24 8.0 8.0 87.7

Disagreed 28 9.3 9.3 97.0


Total 300 100.0 100.0


The table shows that 30% of the respondents strongly agreed that Branding is known to be

associated with trademark, 39.7% of the respondents agreed to the contrary, 8% of the respondents are unsure, 9.3% of the respondents disagreed to the subjected matter and 3% of

the respondents strongly disagreed. Thisimplies that majority of the respondents strongly

agreed that Branding is known to be associated with trademark.


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Branding is beneficiary to both the organization and the customers at large



85 28.3 28.3 28.3

Agreed 84 28.0 28.0 56.3

Undecided 23 7.7 7.7 64.0

Disagreed 95 31.7 31.7 95.7


Total 300 100.0 100.0


The table shows that 28.3% of the respondents strongly agreed that Branding is beneficiary to both the organization and the customers at large, 28% of the respondents agreed to the

contrary, 7.7% of the respondents are unsure, 31.7% of the respondents disagreed to the subjected matter and 4.3% of the respondents strongly disagreed. This implies that majority of

the respondents disagreed that Branding is beneficiary to both the organization and the customers at large.

TEST OF HYPOTHSES

The Pearson correlation (r) was employed to test the association between the variables stated in

the hypotheses at 0.01 level of significant.

Decision Rule: Accept the Alternative Hypotheses and reject the Null Hypotheses if the

Pearsoncorrelation (r) is positive. The level of strength between this variable can also be

determine as indicated in a table below:

Coefficient Value Strength of Association

1.1 < / r / < .3 Small correlation

0.3 < / r / < .5 Medium/moderate correlation

/ r / > .5 Large/strong correlation

Source: Field survey (2019)

Where r means the absolute value of the Pearson correlation coefficient.

HYPOTHESIS ONE H01: There is a significant relationship between branding and consumer behavior.

From the table above, the Pearson correlation (r) analysis between Branding and Consumer Behavior variables is 0.910, indicating a strong positive correlation between Branding and

Consumer variables. Thus, the null hypothesis is rejected and it is concluded that there is a

significant relationship between branding and consumer behavior.

HYPOTHESIS TWO H02: There is correlation between brand quality and consumer behavior.

CONCLUSION AND RECOMMENDATION

The study investigated Branding as it affects Consumer Behavior, in which the findings revealed that: The first finding of the study reveals that there is a relationship between branding and

consumer behavior. This implies that when a product is well package, and has a good image couple with a sound brand name, there is high degree of customers attraction for such product,

thus these elements affects consumer behavior. This finding also reveals that customers can be

forced to involve in impulse buying (i.e Purchasing what is not planned for) just because of branding.

Finally, the study reveals that there is a correlation between brand quality and consumer behavior. Rendering quality products are the key behind most consumer behavior. This is

because quality last long, gives satisfaction and quality aid in advertising. Most consumers prefer

products with high quality and high price rather than low quality with low price. Thus, when there


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is high brand quality, consumer behavior tends to be positive, however when there is low brand

quality, consumer behavior tends to be negative Recommendation

The following are recommended tips to aid branding culture of an organization as well as attracting consumer behavior:

1. Branding should go with trademark from standard organization of Nigeria, NAFDAC and other

regulatory agencies. This will help customers identify and recognize product effectively. 2. Branding should be seen as an investment center rather than cost center. This phenomenon

will help management invest effectively on branding. 3. To attract consumer behavior, advertising and publicity must be in place.

4. Quality and Standard product should be the watchword of management so as to gain positive

consumer behavior

Findings

1. Identification of colour is a critical element in developing a brand strategy which shows that colour does not only enhances the appearance of a product, they also influence

customer behaviour.

2. There are three approaches to developing an effective branding strategy which are, determine what message your brand should convey and determine what creates the

brands. 3. Effective branding is to achieve customer loyalty and support a premium price purchasers

rely on experience and their long held attitudes about a brand.

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AN EXPERIMENTAL EVALUATION OF THE EFFECT OF OPEN/CLOSED-BOOK

EXAMINATIONS AND FREE-RIDING BEHAVIOUR IN TAKE-HOME ASSIGNMENTS ON THE PERFORMANCE OF ACCOUNTING STUDENTS

ADEBAYO, A. (PhD)1

AKINOLA, T.O. (PhD)2

EZE, B.U. (PhD)3

1 Department of Accounting, Hallmark University, Ijebu-Itele, Ogun State 2 & 3 Department of Business Administration, Hallmark University, Ijebu-Itele, Ogun State

Abstract This paper investigates free-riding behaviour, that is the idea of seeking help with doing homework among accounting students in a private university in Nigeria. It examines the students’ perception of the ethics of this behaviour in other to determine the usefulness of take-home assignments, given that take-home assignments provide ample opportunity for students to free-ride. The objective of the paper is to provide empirical evidence on the benefits of take-home assignments and how these impacts the free-riding behaviour and performance of accounting students. The study adopted the pretest-posttest control group quasi-experimental design. Two instruments (a pretest take-home and posttest no-take-home questionnaires) were used to collect data. Three hypotheses were proposed and tested at 5% level of significance, while data collected were analysed descriptively using mean and percentages, while hypotheses were tested with Chi-Square, correlation analysis and Analysis of Variance (ANOVA). Overall, the results showed that: Students generally recognise free-riding for what it is, that is, unethical. There exists an inverse relationship between the pedagogical benefit of take-home assignments and free-riding behaviour. Take-home assignments provide pedagogical benefit to all students in spite of free-riding; and take-home assignments are more helpful to high-performing students than low-performing students. These findings confirm and suggest that free-rider disincentives should accompany take-home examinations to increase the effectiveness of take-home assignments as a tool to enhance learning among accounting and other students.

Keywords: Closed-book Exam, Examination Ethics, Free-riding Behaviour, Open-Book Exam, Pedagogical Benefits.

1.0 Introduction Concerns about academic dishonesty are shared among various stakeholders in the educational

enterprise worldwide. Accounting profession has equally been challenged to address the issue

among accounting students since the profession is hinged on absolute integrity. In Nigeria, for example, the Joint Admission and Matriculation Board has been battling with examination

malpractices for years. The board had to repeatedly re-validate all biometrics of candidates that have taken the board’s examination in recent time. It has also attempted to dismantle

registration cartels and examination malpractices racketeers and bring them to book along with their collaborators (Oloyede, 2019).

In 2006, the US-based Carnegie Council on Policy Students in Higher Education opined that the

nation’s tertiary institutions are afflicted with ethical crisis. Similarly, the Tread Way Commission

(National Commission on Fraudulent Financing Reporting, 2004); Association to Advance Collegiate Schools of Business (AACBS, 2006), and American Institute of Certified Public

Accountants (AICPA, 2007) had called for accounting programmes to incorporate ethical instruction. Many colleges and universities have now integrated ethics into their academic

programmes, as a consequence of the perceived deterioration of ethical behaviour in the academic environment (Welton et al., 2007).

However, despite the resulting increase in classroom exposure to ethics, evidence suggests that students continue to engage in unethical behavior (McCabe & Trevino, 2006). The authors

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reported 65% of students surveyed admitted to participating in some of the cheating behavior. At

the classroom level, many studies have revealed that some students copy from others (Cheat) in preparation of take-home assignments rather than expend effort to complete the take-home

assignments on their own (Weber et al., 2007). Other researchers are skeptical about the pedagogical benefit of take–home assignments because previous studies fail to control for the

cheating that may have occurred (Andrada & Linded, 2005).

The implication of this is that, if the student is not penalized for the cheating that occurred, the

student has effectively gotten what is referred to as free-ride. There is no direct empirical evidence to support the claim that free-riding is not inherent in take-home assignment

environment, nor that free-riding negates the pedagogical benefit of the take-home assignments. Accordingly, it is premature to denounce the pedagogical benefit of take-home assignment and

free-riding behavior and the effect of free-riding behavior on students’ performance when take-home assignments are used as a preparatory tool. In addressing this research gap, this study

evaluates free-riding behaviour among accounting students in a private university in Nigeria. It

examines the students’ perception of the ethics of this behaviour in other to determine the usefulness of take-home assignments, given that take-home assignments provide ample

opportunity for students to free-ride. The objective of this study is to provide empirical evidence on the benefits of take-home assignments and how this impacts the free-riding behaviour and

performance of accounting students.

2.0 Literature Review The Gain Theory offers theoretical background for this study. This theory states that entities tend

to resort to unethical behavior when they have more to gain than to lose (Donaldson & Werhane,

2004). In the context of take-home assignments, the gain theory suggests that students will resort to free-riding when they perceive that such behavior will improve their grade and

downside risk is minimal. Further, Kibler (2006) suggests that students perceive cheating as a means of achieving academic goals and avoiding failure, believing they are incapable of solving

problems on their own.

Numerous studies have examined the pedagogical benefit of take-home assignments. Onifade et al (2007) opined that the occurrence of free-riding may be overstated because previous

researchers fail to ascertain if students perceive free-riding behavior as unethical or not

(Ackerman, 2007). This suggests that unless studies expressly instruct students not to engage in free-riding behavior, inferences regarding the effect of free-riding behavior on the pedagogical

benefit of the take-home assignments may be confounded and indeed invalid. In some studies, the examination is “open-book”. In other, it is “closed book”. Various other studies (feldhusen,

2005; Kalish, 2003; Kararup et., Al 2003; Michaels and Kieren, 2003) have also examined the

topic of open versus closed book examinations. This paper attempted to unveil the effect of open/closed-book examinations and free-riding behaviour in take-home assignments on the

performance of accounting students through an experimental evaluation.

The first comprehensive study on cheating behaviour (Bowers, 2005) finds that many students who think that cheating is wrong do so anyway. McCabe and Trevino (2006) conducted a similar

survey of 6,000 students at 31 colleges in the US. They find that three of five students self-reported that they participated in some form of cheating or the other. This finding found an

increase in the reported incidences when compared with the report of Goldsen et al (2004).

Goldsen et al (2004) reported two of five students polled at eleven colleges and universities admitted. McCabe and Trevino (2003) further reported that 26-percent of this increase during the

last 30 years relates to cheating in tests and examinations. These findings lend credence to the concerns about the pedagogical of take-home assignments. At Al-Hikmah University, Ilorin

between 2006 and 2008, about six students were expelled for same reason. In reference to the take-home assignments, bowers (2005) reports that the greatest amounts of dishonesty take

place in unsupervised assignments. Since the take-home assignments is a form of unsupervised


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test, it is conceivable that students’ lack of honesty affects the pedagogical benefit of take-home

assignments environment, an additional concern relates to the pervasiveness of the behavior.

Some researchers suggest that the tendency to free-ride may differ among student groups (Ravenscroft & Buckless, 2005; Onifade, et al., 2008). The implication is that there is generally a

relation between the quality of students and free-rider participants. Indeed, evidence exists to support that there is a significant negative relationship between cheating behavior and G.P.A

(Zastrow, 2007; Crown & spiller, 2004).Accordingly, we proposed the following hypothesis:

H1: low-performing students are more likely to free-ride than high-performing students.

Furthermore, in most studies that examine the pedagogical benefit of the take-home test, the

researcher infers the occurrence of free-riding based on a comparison of the take-home group’s

performance with the no-take-home group’sperformance a follow-up in-class examination. In the instances when the no-take-home group performed better on average than the take-home, free-

riding is either not considered (Gay and Gallagher, 2003; March, 2003) or assumed not to exist (March, 2003). In the instances when the take-home group performed better on average that the

no-take home group on the follow-up, in-class examination, the researcher infers that free-riding

is nonexistent or insignificant (Onifadeet al., 2008). Researchers make the same inference when no difference between the two groups is found (Fernald and Webster, 2007).

Onifade et al., (2008) establish that not all students engage in free-riding behavior. The authors

further observed that the greatest pedagogical benefits seemingly accrue to those students who refrain from cheating. Considering these results in tandem, the implication is that the pedagogical

benefits of the take-home assignments at constrained, rather than negated, by the extent of free-riding that takes place while performing take-home assignments. On the other hand, free-

riding behavior may occur in any unsupervised assignment. Thus, that free-riding has the

opportunity to be passive and absolutely involved in contributing to the completion of the take-home assignments. Accordingly, it is conceivable that the free-rider may fail to accomplish much

learning, yet obtain a grade based on the outcome of the efforts of others. As a consequence, the free-riding behavior assumed to be inherent in a take-home assignment environment may

reduce or eliminate the pedagogical benefit of take-home assignments for free-riding

participants. Thus, weproposed the following hypotheses: H2: Take-home assignments will provide pedagogical benefits for low-performing students and

high performing students. H3: Low performing students will benefit less than High-performing students from the use of

take-home.

3.0 Methodology The study adopted the pretest-posttest control group quasi-experimental design. The design is

schematically represented as follows:

Experimental group 1 = O1 X1 O2

Experimental group 2 = O3 X2 O4

Control Group(C) = O5 X3 O6 O1,O3, and O5 are the pretest scores for experimental groups 1, 2 and the control group

respectively. O2, O4, O6represent the posttest scores for the experimental groups and the control

group respectively. X1 represents Treatment 1 (Take-home-group – Open-Book)

X2 represents Treatment 2 (Take-home-group– Closed-Book)) X3 represents the Control group (No-take-home-group)

Forty-three (43) accounting students enrolled in three sections of undergraduate principles of

accounting provided the data for this study. The same teacher taught the three sections. The subject took three uniform, major, closed-books, multiple choice, standardized, in-class

examination. The examinations were administered to the 43subjects (the available accounting


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students in the private university) after each cycle of four chapters during the school term,

resulting in three examinations per subject or 129 observations. The participants’ self-reported demographic data include age and GPA. The instructors assigned identical homework problems to

the participants in all three groups. Participants in one group completed a pretest instrument as a take-home assignment under an open-book format outside of class (take-home group) and

returned the completed instrument to the teacher at the start of the subsequent class meeting.

The pretest instrument corresponded with its related follow-up, major, closed-book, in class examination. Participants in other two sections did not receive take-home assignment (no-take

home group). Both groups completed the same major, closed-book, in class examination on the same day.

The participants completed a post-examination questionnaire after learning of all their grades.

The purpose of the questionnaire was to collect data regarding whether accounting students can identify appropriate ethical behaviour while performing take-home tests, and to identify the

respondents’ free-riding behavioural tendencies. I instructed the participants to disclose only their

GPAs on their questionnaire in order to protect the anonymity of their responses and to encourage them to respond honestly. The questionnaire included two scenarios, each followed by

a question and decision choice to determine if a majority of the students would recognize an appropriate ethical behaviour that should occur while completing take-home assignments.

Scenario one was presented as follows: “You were given a take-home assignment and you were

asked not to seek help from anyone. What is the right thing to do?” The participants indicated one of the following responses:(a) Ask someone to do it for you; (b) Seek help while you are

doing it yourself; (c) Do it without asking anyone for help. Scenario two was presented as follows:

“You are given a take-home assignment in this course and you were instructed not to ask for help from anyone while completing the take-home assignment(1)

would you comply with instruction? and (2) Do you believe that most of your

classmates would comply with this instruction?” following each question in the second scenario, the participants indicated their response by checking “Yes or

No”. To test Hypothesis 1, a chi-square analysis of the frequency of the subjects’ responses was

performed on the questions concerning whether or not the subjects would comply with the

instruction not to free-ride. A correlation analysis was also performed to compare what they indicated they would do to what they believed their peers would do while completing take-home

assignments. The correlation analysis was performed based on the assumption that the projection theory holds. Projection theory posits that individuals tend to project their true

behavioural tendency onto others (Cohen et al., 2008). Accordingly, a high correlation between

the responses validates the subjects’ responses concerning whether or not they would comply with the instruction not to free-ride. The result of this analysis in conjunction with the GPA of

each respondent enabled the identification of the participants (low-and high-performing) who had more of a tendency to free-ride (free-rider or non-free-rider).

Hypothesis 2 and 3 were tested using 3 x 2 analysis of variance (ANOVA). Performance,

measured by the follow-up, in-class, closed-book examination scores, is the dependent variable. Preparatory tool (take-home, no take-home) and free-riding (free-rider or non-free-rider) are the

two factors. The equivalency of the difficulty level of the three major examinations to explore the validity of combining the exam scores (performance measure) was examined across the three

major, follow-up, closed-book, in-class examinations. The results show no significant difference in

the level of difficulty of the three major examinations (F=0.62, p>0.05). Therefore, the three major exam scores are combined, resulting in 129 observations from the 43 subjects over the

three major examinations. The pooled data consist 39 observations in the take-home group and 90 in the no-take-home group.


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The performance of the free-riders in the take-home (experimental) group is compared with the

performance of the free-riders in the no-take-home (control) group. Similar comparisons were performed between the non-free-riders in the take-home (experimental) group and the non-free-

riders in the no-take-home (control) group. The mean size effect of the exam scores is computed for the free-riding students in the experimental group 2. The mean differences between the

performances of the different groups were evaluated as an additional measure of the level of

achievement of the different groups, and to assess how free-riding moderated the effect take-home assignments on the performance of the students. Also examined was the relative

magnitude of the F-values obtained from the ANOVA to assess the relative strength of the effects of the take-home assignments and free-riding tendencies on the performance of the students.

4.0 Results

Using the students’ Grade Point Average (GPA) at the beginning of the semester, I performed a one-way analysis of variance (ANOVA) to assess the equivalency of the quality of students in the

sections (one section in the take-home group and the other two sections in the non-take-home

group). The results show there is no significant difference in the qualities of the students across the three sections (F=1.07, P>0.05). The mean Grade point averages of the three are 2.889,

3.081, and 2.984. The ages of the students range between 19 and 20.

Regarding whether or not the students could identify free-riding as unethical, the result of the analysis of the frequency of the responses collected with the questionnaire show 67% stated that

the right thing to do while completing a take-home assignment is to do it themselves. Regarding whether there is difference in the propensity of the different qualities of students who comply

with the instruction not to seek assistance from anyone while completing take-home

assignments, the result of the chi-square analysis show 65% of the low-performing students (i.e., with GPA <3.0) stated they would not comply while 43% of the high-performing students (i.e.,

with GPA >3.0) stated they would not comply.

In addition, the Pearson correlation analysis of what they would do and what they believed their peers would do while performing take-home assignments is 0.5 and further validates the

students’ responses. This finding supports the projection theory that individuals tend to project

their true behavioural tendency onto others. The results of the chi-square analysis is statistically significant (Chi-square = 4.093, DF=1). Thus, majority of the low-performing students and

minority of the high-performing students expressed a propensity to free-ride. In my view, this finding supports the free-riding tendencies proposed using the gain theory that the low-

performing students are more likely to ignore the appropriate ethical behaviour and free-ride than the high-performing students. Thus, in the context of the gain theory, the null hypothesis

(H1) that there is no difference in the low-and high performing students’ propensity to free-ride

is rejected.

None of the respondents indicated that they would ask someone to do the take-home assignments for them. The implication is that even those who have tendency to free-ride would

not absolutely be passive and uninvolved in the performance of their take-home assignments. Thus, free-riders have an opportunity to benefit from take-home assignment as preparatory tools

for major, closed-book, in examinations.

Both between-subjects and within-subjects analysis to examine the effect of free-riding on the students’ performance were carried out. Table 1 reports the ANOVA and mean results from this

study. At 5% level of significance, the results show that the non-free-riders in the take-home

group performed significantly better in the major, follow-up, in-class exam than the non-free-riders in the take-home group (F=13.62, p<0.01, n=75). The non-free-riders in the take-home

group outperformed the non-free-riders who were not in the take-home group by means difference of 16.08 points. Although, the free-riders in the take-home group outperformed the

free-riders in the no-take-home group by a mean difference of 7.82 points, the mean difference


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in the performance of the free-riders in the take-home and no-take-home group is not significant

(F=3.70, p>0.05, n=54).

The results in Table 1 also indicate that the effect of take-home-assignments reduced the gap between the performances of the free-riders and non-free-riders. For example, the non-free-

riders in the take-home group outperformed the free-riders who were in the take-home group by 15.93 points (79.30 – 63.37). On the other hand, the non-free-riders in the take-home group

outperformed the free-riders who were not in the take-home group by 23.75 points (79.30 –

55.55). In addition, when I compared the performances of the free-riders in the take-home group with the performances of non-free-riders in the no-take-home group, their performances were

about the same (63.37 – 63.22 respectively) (see Table 1). This is another indication that take-home assignments improve the performance of the free-riders in spite of their free-riding

behaviour. The combined results of all these analyses provide support for my second hypothesis (H2).

Table 1

Comparison of the Effect of Take-Home Tests and Free-Riding Behaviour on the Performance of Different Qualities of Accounting

Students using 2 x 2 ANOVA

Free-Riders (GPA<3.0)

Non-Free-Riders (GPA 3.0-4.0)

Row F- and P values

Take-home Group Mean=63.37 SD=13.65 (n=15)

Mean = 79.30 SD=13.93 (n=24)

F=12.54 P=0.001*

(N = 39)

No-Take-home Group Mean=55.55 SD=13.64 (n=39)

Mean = 63.22 SD = 18.67 (n=51)

F = 4.58 P= 0.035*

(N = 90)

Column F- and P- values

F = 3.70 P=0.060 (N=54)

F = 13.62 P< 0.000* (N=75)

(N = 129)

Mean Differences 7.82 16.08

Mean Size Effect 0.57 0.86

*Significant at p< 0.05

The results supporting the third hypothesis (H3) proposing that free-riders would not benefit as much as non-free-riders are as follows: (1) The relative magnitude of the F-values of the effect

of take-home assignments on the performance of free-riders and non-free-riders show an effect

that is approximately four times greater in favour of the non-free-riders over the free-riders (i.e., F=13.62 versus F=3.70); 2) The difference between the respective mean scores (79.30 – 63.22

= 16.08) of the non-free-riders in the experimental group and the non-free-riders in the control is double the difference between the respective mean scores (63.37 – 55.55 = 7.82) of the free-

riders in the experimental group and the free-riders in the control group; and 3) The Mean Size

Effect (0.86) of the take-home assignments on the performance of the non-free-riders in the experimental group is higher than the Mean Size Effect (0.57) of the take-home tests on the

performance of the free-riders in the experimental group. These results indicate that the level of the differential achievement of the non-free-riders is much higher than that of the free-riders.

Thus, H3 is supported.

CONCLUSION This study addresses the methodological flaws inthe measurement of the pedagogical benefit of

take-home assignments in the presence of free-riding and extends prior research by assessing

the distribution of free-riding behaviour among different qualities of business students. The results support prior studies that show that take-home assignments have pedagogical benefits.

Further, students recognize free-riding for what it is and view it as unethical. However, certain


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students engage in free-riding behaviour in spite of the fact they consider free-riding as

unethical.

The analysis of this behaviour shows that the distribution of free-riding behaviour is indirectly associated with student quality (measured by GPA). This finding supports previous research that

reports a significant negative relation between Grade Point Average and cheating behaviour. Accordingly, the study provides some theoretical arguments to support critics who state that the

low-performing students tend to free-ride on high-performing students.

However, it does not support their view that take-home assignments do not have any pedagogical benefit for those low-performing students. Though not as much as the high-

performing students, the low-performing students in the experimental group benefit significantly

from the use of take-home assignments as a learning tool. When one considers the favorable effects of take-home assignments on the performance of all students, an argument can be made

that business lectures in universities should consider the use of take-home assignments as preparatory tools. Further, free-rider disincentives should accompany take-home assignments to

increase the effectiveness of take-home assignments as tools for enhancing the learning and

retention process.

The generalizability of the results is subject to some constraints. First, all the subjects are males.

Therefore, the results may not be applicable to female students. Second, the experiments were

conducted for one accounting and one faculty member. Therefore, the findings may apply only to courses with similar content and classroom setting. Third, the responses to the post-examination

questionnaires from the subjects concerning their free-riding behavioural tendencies were generalized for grouping the subjects into free-riders and non-free-riders. Though this approach

did not allow for direct linkages of the subjects’ individual responses to their performances, it was

used in order to assure anonymity of the subjects’ responses and to avoid response bias.

From the findings of this study, it may be argued that free-riding disincentives should always

accompany take-home assignments or examinations to increase its effectiveness as a tool for

enhancing learning among business students.

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EFFECTS OF REMITTANCES ON CONSUMPTION IN NIGERIA

YUSSUFF, Rukayat Omobolanle (Ph.D)

Lagos State University, Ojo Faculty of Social Sciences

Department of Economics Email: [email protected], [email protected], [email protected]

Abstract The study investigated the effects of remittances on consumption, using time series dat for the period 1990-2015. The results of the ADF and PP tests shows that all the variables were nonstationary in levels but stationary after differencing them once I (I).The results of the trace statistics, maximum eigenvalue along with the normalized co-integrating coefficients show that there is a long-run relationship among the variables. The normalized cointegrating equation pointed to a positive influence of deposit interest rate (DEPRATE) and openness (OPEN) on real per capita consumption (CON), with negative correlation between real per capita GDP (RPCGDP) and real per capita consumption (CON), remittances (REM) and consumption (CON). The F- Test indicates that remittances (REM), deposit interest rate (DEPRATE), openness (OPEN) and real per capita GDP (RCPGDP) are jointly significant to influence the dependent variable real per capita consumption (CON). The ECM results indicates a positive effects of deposit interest rate (DEPRATE), real per capita GDP (RPCGDP), remittances (REM) and openness (OPEN) on consumption (CON).

Keywords: Remittances, Consumption, Cointegration, ECM, Nigeria

Word Count: 165

1. Introduction

Remittances are both financial and non-financial resources sent by migrants in foreign countries

to their home countries. Remittances – the unrequited transfer of funds by the migrants to their families at home – are a source of foreign exchange which is much scarce in developing

economies. Since it constitutes an important source of financial inflow for many developing economies, workers’ remittances have been recognized as an important feature of developing

countries. In recent years, remittances inflows to these economies have not only increased

tremendously but have surpassed the inflows of other sources of foreign exchange such as official aids and private capital flows as primary sources of external funding in many countries,

often exceeding other flows to the external capital account (Chami, Barajas, Cosimano, Fullenkamp, Gapen and Montiel, 2008; Ratha, 2009, Migrant and Development Brief 31, 2019).

Remittances are now the largest source of foreign exchange earnings in the LMICs excluding

China. They are more than three times the size of official development assistance (ODA). Moreover, since foreign direct investment (FDI) has been on a downward trend in recent years,

remittances reached close to the level of FDI flows in 2018. Excluding China, remittances were

significantly larger than FDI flows.

In 2010, officially recorded remittances inflow to developing countries was estimated to increase

by 6 percent to US$325 billion (Mohapatra, Ratha and Silwal, 2010). Data from World Bank

(2011) indicates that global remittances was $440.1 billion dollar in 2011 and remittances is 0.31% of global GDP in 2009. The World Bank’s and Remittance Fact-book (2011) estimates that

remittances received by developing economies in 2009 totaled US$416 billion representing 0.7 percent of their aggregate GDP. These flows represent an excess of about 5 percent of GDP for

46 countries and exceed 10 percent of GDP for 21 countries, Nigeria inclusive.

Remittances flow to low and middle income countries (LMICs) witnessed an increase in 2017 by 8.5 percent, increasing to $466 billion after two consecutive years of decline (Migration and

Development Brief 29, 2018). Global remittances attained $613 billion. Remittances flows in all





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regions also increased in 2017-in Europe and Central Asia by 20.9 percent, in Sub-Saharan Africa

by 11.4 percent, in the Middle East and North Africa by 9.3 percent, in Latin America and the Caribbean by 8.7 percent, in East Asia and the Pacific by 5.8 percent, and in South Asia by 5.8

percent. The trend is expected to continue in 2018, with remittance flows to LMICs growing at an estimated 4.1 percent to reach $485 billion. However, remittances flows to LMICs in 2018

reached $529 billion, an increase of 9.6 percent over 2017 (Migration and Development Brief 31,

2019). Remittances flow to LMICs in 2019 has been estimated to reach $550.

Remittances to Sub-Saharan Africa increased from $34 billion in 2016 to $42 billion in 2017 and to $46 billion in 2018. Projections indicate that remittances to the region will keep increasing, but

at a lower rate, to $48 billion by 2019 and to $51 billion by 2020. This increase is partly due to rise in global economic growth, especially in the high-income OECD countries. Also, a rise in oil

prices since July 2017 boosted economic activities in oil-producing countries. Both OECD and oil-producing countries host many Sub-Saharan African migrants. The largest remittance recipients

in Sub-Saharan Africa in 2017 included Nigeria ($22 billion), Senegal ($2.2 billion), Ghana ($2.2

billion), Kenya ($2.0 billion), Uganda ($1.4 billion), and Mali ($1.0 billion).Remittances represent a particularly large share of the GDP of Liberia (27 percent), Comoros (21 percent), the Gambia

(21 percent), Lesotho (15 percent), Senegal (14 percent), and Cabo Verde (13 percent). Nigeria, the largest remittance-recipient country in Sub-Saharan Africa and the sixth largest among

LMICs, received more than $24.3 billion in official remittances in 2018, an increase of more than

$2 billion compared with 2017.

Given the global increase in the flows of remittances (IMF 2005, World Bank 2005, and Ratha

2007, Migration and Development Brief 29,2018, Migration and Development Brief 31, 2019),

especially in the developing countries, it has become important to study the development impacts of remittances in those economies. This is because of the likely impact of remittances on the

economic development of the recipient economies. A lot of studies has therefore been undertaken to analyze the microeconomic and macroeconomic of remittances in developing

countries across various dimensions (Alberto and Salvado, 2006; Shabaz and Qureshi, 2007). At a

microeconomic level, remittances have been found to boost investment in human capital and educational attainments (Kanaiaupuni and Donato, 1999), thereby reducing poverty in many

developing countries (Adam, 2006; Acosta et al 2006). Furthermore, there is significant evidence that remittances increase not only consumption but tend also to raise health levels and to

increase investment in public infrastructure. At a macroeconomic level, the existence of a positive relationship between remittances and growth is more controversial. While remittances tend to

favour the accumulation of important production factors such as physical capital and education

(Cox Edward and Ureta, 2003), they also exert detrimental effects in terms of incentive. They also create 'Dutch disease' effects through the appreciation of domestic currencies, leading to

further deindustrialization in the receiving country.

The general economic effects of remittances in an economy depend partially on the propensity of the recipient households to consume and invest. When remittances are invested particularly in a

productive activities, it directly promote growth in output. When consumed, remittances have a multiplier influence on the economy through poverty reduction as well as increase in foreign

currency reserves and further leads to better investment condition in the receiving economy.

The positive impact on the improved living standard of receiving household have a spill-over- effect on the local economy.

However, three issues of controversy on the role of remittances can be found in the literature on

how remittances received by households in the home countries are spent and the effect of these remittances inflow on the economic development in recipient economies (Adams, 1998). The first

is that while remittances might not be explicitly invested in productive businesses, they can be spent on investment-type goods such as education, health, housing and other durables. The

second is that remittances is similar to every other source of income, and are thus fungible.


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Therefore, even when not directly invested in business activities or in human capital, they may

release other resources for spending on such investments. The third is that increased spending on consumer goods may be beneficial for domestic development, since increased demand for

these goods may create incentives for the establishment of new retail business (except if the goods are imported) and thus may create new local employment opportunities (Castalado, 2007)

The key question relating to these huge transfers is how are these remittances spent or used?

Are these money received by households spent on consumer goods or channeled into investment and what is their impact on economic growth in Nigeria.

Research Objective The objective of this paper is to investigate the effects of remittances on consumption in Nigeria. Thus, the study attempt to determine whether remittances influences consumption in Nigeria.

Research Hypothesis Ho: Remittances has no significant effect on consumption in Nigeria. This paper contribute to the remittances-growth literature by investigating how remittances are

utilized and its effect on the Nigerian economy.

2 LITERATURE REVIEW Theoretical Underpinning Different view exists on the determinant of consumption. The general believe is that consumption

is partially or wholly dependent on income. Keynes absolute income hypothesis believes that current consumption depends absolutely on current income. This can be illustrated by the linear consumption function 𝐶𝑡 = 𝐶𝑜 + 𝑏 𝑌𝑡 𝑤𝑖𝑡ℎ 0 < 𝑏 < 1

The permanent-income hypothesis of Milton Friedman in arguing in favour of the determinants of

consumption considers the mean of all anticipated income in the long-run, that is, the labour income plus capital income as the determinant of current consumption. The relationship between permanent consumption and permanent income can be expressed as 𝐶(𝑃) = 𝑔𝑌(𝑃) where C (P)

represents permanent consumption and Y (P) permanent income. The Relative Income Hypothesis of Duesenbery on the other hand argued that the level of

household income in relation to the household with which it identifies itself with that determines the proportion of the household income to be consumed.

Empirical Literature The view in most empirical literature on the issue of how remittances are spent by household is that remittances are fungible with other sources of income. This means that it is not possible to

associate remittances with specific expenditures. Remittances are mainly used for daily expenses

rather than for investments according to Glytsos (1993) and Chami et al. (2005), so that diaspora contributions would not be beneficial for development. However, recent studies suggest that

remittances go into specific uses compared to other sources of income. For instance, Amjad (1986) analyzed the uses of remittances in Pakistan and concluded that remittances financed

sufficiently large part of aggregate consumption, investments and other needs of the economy.

Adams (2005), using data from a survey of 7276 households in rural and urban Guatemala finds that remittance receiving households in Guatemala spend less on the margin on consumption of

food, consumer goods, and durables. Instead they spend more on investment goods like education, health, and housing.

Ratha and Mohapatra (2007) observed that remittances causes the prices in the country to

increase because of unproductive investment of remittances received households on land, jewelry

and so on. However, Adams and Cuecuecha (2008) in another study obtained a contrary result when their study indicates that households receiving remittances in Ghana do not spend more at

the margin on food, education and housing than households with similar income levels and characteristics that do not receive remittances. They used the modified version of Engel function

of the Working-Leser model for their analysis.


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Combes and Ebeke (2010) concluded that remittances positively and significantly contribute in

reducing household consumption instability. Malik and Sarwar (1993) analyzed the differences in consumption behavior of the household that received remittances and those did not receive

remittances and concluded that MPC was high for those household that received national remittances than those that received international remittances.Adams and Cuecuechea (2010),

using data for Guatemala, find that international remittance-receiving households spend more on

education, health, and housing, and less on food than do other households. The studies have explored the differences in household expenditures across remittance receiving and non-receiving

households.

Clement (2011) analyzed the remittances impact on household expenditure patterns in Tajikistan and it was concluded that remittances have no role in productive investment. Therefore,

remittances were interpreted in terms of short-term coping strategies that help dependent households to achieve a basic level of consumption. Sharma (2011) examines the impact of

international migration on household welfare using household survey in Sri Lanka. He founds that

there were statically significant differences between mean levels of per capita total consumption expenditures, per capita food expenditures and per capita non food expenditure between migrant

and non migrant households. And expenditures are higher for households that have migrants.

Adida and Girod (2011) in their study found that remittance income improves recipient access to public services in Mexico on the other hand, Airola (2007) indicated that recipient families spent a

substantial portion of their income on durable goods, health care and housing in Mexico. Iqbal and Sattar (2005) estimated the relationship between worker’s remittances and real GDP growth

in Pakistan. Results of the study showed that workers’ remittances were an important source of

economic growth in country.

Akpan (2018) investigated the short and long-run effects of remittances on private remittances

on household consumption in Ghana from 1980 to 2016. His findings indicated a positive though

insignificant impacts of remittances on household consumption in Ghana in both the short and long run. The study of Olowa and Awoyemi (2011) examines the relationship between

remittances and household expenditures in rural Nigeria by using the 2004 living standard survey to analyze how the receipt of domestic remittances (from within Nigeria) and foreign remittances

(from abroad) affects the marginal spending behaviour of households on various consumption

and investment goods. Expenditures were categorized into six namely food, education, housing, health, consumer goods and others. Their results show that households receiving remittances

spend less at the margin on consumption of food, consumer goods and durables than do households receiving no remittances.

3 Methodology Sources of Data: Time series data sourced from World Development Indicator (2015) and Central Bank of Nigeria Statistical Bulletin (2015) within the period 1990-2015 was used for the

study. To determine the responsiveness of consumption to remittances, real per capita

consumption (CON), real per capita GDP (PRCGDP), remittances as a percentage of GDP (REM), openness (OPEN), deposit interest rate (DEPRATE) variables were used

Analytical Framework

In the literature, researchers(Mallick; 2008) used the standard Keynesian and Neo-Classical framework to explain the effect of remittances on private consumption, private investment and

economic growth whereby remittances are perceive as an addition to total domestic income which increases consumption expenditure and once consumption needs are satisfied, then it is

used for investment. If remittances is used for real investment, it would result in increase growth

in output. Private consumption is assumed to depend on income, wealth, private transfers, rate of interest, and openness of the economy. Private investment mainly depends on rental cost of

capital, availability of bank credit and funds available from other sources, as well as openness of the economy and other complementary and supplementary factors. Economic growth rate mainly


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depends on gross private sector investment, openness of the economy, fiscal policy and rates of

interest. These functional specifications are based on general type of models grounded on sound economic reasoning.

3.3 Model Specification

Given the framework above and adapting from Mallick (2008) and Ben Mim and Ben Ali (2012), the following models are specified:

Consumption Model 𝑪𝑶𝑵𝒕 = 𝜹𝟏 + 𝜹𝟐𝑹𝑷𝑪𝑮𝑫𝑷𝒕 + 𝜹𝟑𝑫𝑬𝑷𝑹𝑨𝑻𝑬𝒕 + 𝜹𝟒𝑹𝑬𝑴𝒕 + 𝜹𝟓𝑶𝑷𝑬𝑵𝒕 + 𝝁𝒕

Where 𝐶𝑂𝑁 is real per capita consumption., 𝑅𝑃𝐶𝐺𝐷𝑃 is real per capita GDP, 𝑅𝐸𝑀 is remittances

as a percentage of GDP, 𝑂𝑃𝐸𝑁 is openness measures as (export + import)/GDP, DERATE is

deposit interest rate to control for trade-off between consumption and saving. According to the

literature, countries with higher per capita GDP have higher consumption rates. A higher deposit rate can produce a negative or a positive effect on consumption, depending on which of the

traditional substitution and revenue effects is stronger (Ben Mim and Ben Ali, 2012). .A priori expectation

Given the OLS linear equation specified above, it was expected that the following conditions are obtainable

𝜹𝟐 > 0, 𝜹𝟑 < 0 > 0, 𝜹𝟒 𝑎𝑛𝑑 𝜹𝟓 > 0

Estimation Technique Unit Root Test The null hypothesis is that there is unit root in the series, which is 𝐻0: 𝛼 = 0 against the

alternative hypothesis, 𝐻1: 𝛼 < 0 H1: α < 0, that the time series is stationary (no unit root).

The variables are tested at levels. In testing for the unit root, the Augmented Dickey Fuller (1979) and Phillip-Perron unit root test were employed.

Co-integration Test

The study conducted a Co-integration test in line with Johansen and Juselius (1990) approach to establish the long run relationship among the variables. Two variables are co-integrated if both

their Max-Eigen and Trace statistic are greater than their respective critical values. Trace statistics test the null hypothesis of 𝑟 = 0 𝑜𝑟 𝑟 ≤ 1 against alternative hypothesis of 𝑟 ≥ 1 𝑜𝑟 𝑟 =2. On the other hand maximum eigen value statistics test the null hypothesis of 𝑟 = 0 𝑜𝑟 𝑟 = 1

against alternative hypothesis of 𝑟 = 1 𝑜𝑟 𝑟 = 2.

Error Correction Model (ECM)

In addition, the study investigated the short-run dynamics of the model using Error Correction

Mechanism (ECM), to capture the effect of short run movement in empirical models in the study. The ECM was derived from the long run equation and it shows the speed of convergence towards

equilibrium among the variables.

Presentation of Results and Interpretation Descriptive Statistics The descriptive statistics was carried out on all the variables in consumption model to find out

whether they are normally distributed or not. Given the time frame of the study (1990-2015), and the frequency of the data, all the variables have 26 observations in each series. Two

approaches were pursued. These include: the probability and chi-square approach.

Table 1 presents the descriptive statistics for the consumption model, CON averaged 16570.06. It ranges from 177.23 to 73821.4 with a standard deviation of 21967.5. DEPRATE has a mean of

6.653462. It varies from a minimum of 1.4100 to 18.8000 with a standard deviation of 5.3059. OPEN, REM and RPCGDP averaged 0.4431, 4.6991 and 0.2564 with standard deviation values of

0.124401, 3.566862 and 0.073688 respectively. The standard deviation reflected the dispersion of the variables around the mean.


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It was found that all the variables in the model (except real per capita consumption) passed the

normality test particularly when the Jarque-Bera value of 9.19 > 5.99. The skewness values for most of the variables are between 0.15 and 1.41, with all variables having positive signs,

indicating skewness to the right. The kurtosis indicates the peakness or flatness of the data relative to a normal distribution. It shows that real per capita consumption (CON) satisfies this

condition with an expected value of 3.70. The probability value of three of the variables are

high (OPEN, REM and RPCGDP) except CON accepting that the normal distribution for all the variables, indicating a normality of their unconditional distributions.

Table 1: Descriptive Statistics for Consumption Model

CON DEPRATE OPEN REM RPCGDP

Mean 16570.06 6.653462 0.443140 4.699144 0.256387

Median 6292.365 4.170000 0.427156 3.851216 0.230670

Maximum 73821.37 18.80000 0.687666 13.04259 0.383910

Minimum 177.2300 1.410000 0.211607 0.032513 0.185000

Std. Dev. 21967.48 5.305923 0.124401 3.566862 0.073688

Skewness 1.412937 1.081215 0.151183 0.983467 0.533623

Kurtosis 3.704561 2.651777 2.268772 3.066050 1.713440

Jarque-Bera 9.188805 5.197142 0.678296 4.195956 3.027104

Probability 0.010108 0.074380 0.712377 0.122704 0.220127

Sum 430821.5 172.9900 11.52164 122.1777 6.666070

Sum Sq. Dev. 1.21E+10 703.8204 0.386889 318.0627 0.135749

Observations 26 26 26 26 26

Source: Author’s computation 2019.

Correlation Analysis The correlation coefficients for the variables in the consumption model is presented in Table 2.

The result revealed that REM and RPCGDP are positively correlated with real per capita

consumption (CON). While DEPRATE and OPEN variables are negatively correlated with per capita consumption (CON). However, the analysis of short run correlation relationships may be

spurious. As a result, a more rigorous analysis was undertaken to underpin the effect of DEPRATE, OPEN, REM and RPCGDP on CON.

Table 2: Correlation Matrix for Consumption Model

CONS DEPRATE OPEN REM RPCGDP

CON 1.000000 -0.543583 -0.444030 0.143825 0.922965

DEPRATE -0.543583 1.000000 -0.241030 -0.512987 -0.670851

OPEN -0.444030 -0.241030 1.000000 0.568245 -0.168551

REM 0.143825 -0.512987 0.568245 1.000000 0.385038

RPCGDP 0.922965 -0.670851 -0.168551 0.385038 1.000000

Source: Researcher’s Computation using 2019 E-View 7

Unit Root Result Stationarity of time series economic variables in the model was established using the Augmented Dickey Fuller (ADF) and Phillips-Perron(PP) tests. The results of the ADF and PP tests are

reported in Table 3. All the variables were found to be nonstationary in levels but stationary after differencing them once I (I).


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Table 3: Stationary Test Result for Consumption Model

Variable ADF Test Statistics

Critical Values PP Test Statistics

Critical Values Order of Integrati

on 1% 5% 1% 5%

Con** Level -4.4603 -4.4679 -3.6449 2.8114 -4.3743 -3.6032

I1

1st Diff -5.3427 -4.4407 -3.6328 -5.8022 -4.3943 -

3.6121

Rpcgdp** Level -2.1875 -4.3943 -3.6121 -2.5201 -4.3743 -

3.6032

I1

1st Diff -4.9204 -4.3943 -3.6121 -4.8637 -4.3943 -3.6121

Deprate*

* Level -1.7282 -4.3743 -3.6032 -1.5214 -4.3743 -

3.6032 I1

1st Diff -6.3011 -4.3943 -3.6121 -6.3291 -4.3943 -

3.6121

Rem** Level -2.1883 -4.3743 -3.6032 -2.2261 -4.3743 -

3.6032

I1

1st Diff -5.2426 -4.3943 -3.6121 -5.2454 -4.3943 -3.6121

Open** Level -1.7592 -4.3743 -3.6032 -1.7592 -4.3743 -3.6032

I1

1st Diff -6.9030 -4.3943 -3.6121 -7.5599 -4.3943 -

3.6121

** denote trend and intercept. Source: Author’s computation 2019

Cointegration Test Result for Consumption Model The result of the cointegration condition is presented in Table 4 using the methodology proposed

by Johansen and Juselius (1990). The result of the trace statistics in table 4 shows that there is one co-integrating equation which rejects the null hypothesis that there is no co-integrated

equation. Under the trace statistics, the rule is to reject the null hypothesis (Ho) when the result

of the trace statistics value is greater than the result of the critical value at 5% level of significance. Thus, in table 4 the statistics value is 75.47623 which is greater than the critical

value of 69.81889 at 5% level of significance. This is shown by the P-value of 0.0165 which is less than 0.05.

The result of maximum eigen value shows that there is one co-integrating equation which reject

the null hypothesis that there is no co-integrated equation. Under the maximum eigenvalue, the rule is to reject the null hypothesis when the result of the maximum eigenvalue is greater than

the result of the critical value at 5% level of significance. Thus, in the table, the statistics value is

39.15891 which is greater than the critical value of 33.87687 at 5% level of significance. This is shown by the p-value of 0.0107 which is less than 0.05.

Thus, the results of the trace statistics, maximum eigenvalue along with the normalized co-

integrating coefficients show that there is a long-run relationship or equilibrium among the variables. The normalized cointegrating equation pointed to a positive influence of DEPRATE and

OPEN on real per capita consumption (CON), with negative correlation between RPCGDP, REM and CON.

Table 4: Johansen Co-integration Test for Consumption Model

Date: 02/09/19 Time: 06:27

Sample (adjusted): 1992 2015 Included observations: 24 after adjustments

Trend assumption: Linear deterministic trend


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Series: CON RPCGDP DEPRATE REM OPEN

Lags interval (in first differences): 1 to 1

Unrestricted Cointegration Rank Test (Trace) Hypothesized Trace 0.05

No. of CE(s) Eigenvalue Statistic Critical Value Prob.** None * 0.804388 75.47623 69.81889 0.0165

At most 1 0.562010 36.31732 47.85613 0.3805 At most 2 0.360359 16.50392 29.79707 0.6764

At most 3 0.203199 5.779563 15.49471 0.7214 At most 4 0.013572 0.327969 3.841466 0.5669

Trace test indicates 1 cointegrating eqn(s) at the 0.05 level * denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values

Unrestricted Cointegration Rank Test (Maximum Eigenvalue)

Hypothesized Max-Eigen 0.05

No. of CE(s) Eigenvalue Statistic Critical Value Prob.**

None * 0.804388 39.15891 33.87687 0.0107

At most 1 0.562010 19.81340 27.58434 0.3542

At most 2 0.360359 10.72436 21.13162 0.6748 At most 3 0.203199 5.451594 14.26460 0.6841

At most 4 0.013572 0.327969 3.841466 0.5669 Max-eigenvalue test indicates 1 cointegrating eqn(s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values

1 Cointegrating Equation(s): Log likelihood -190.0639

Normalized cointegrating coefficients (standard error in parentheses)

CONS RPCGDP DEPRATE REM OPEN

1.000000 -82362.13 1182.427 -3979.179 202906.3 (29368.6) (351.552) (622.827) (22036.3)

Ordinary Least Square Results for Consumption Model

The ordinary lest square result for the Consumption (CON) model indicates a positive coefficient of RPCGDP (252701.2) on CON and negative coefficients of DEPRATE (-304.18), REM(-355.24),

and OPEN (-50519.15) on CON respectively. Table 5: OLS Result

Dependent Variable: CONS

Method: Least Squares Date: 02/09/19 Time: 21:20

Sample: 1990 2015 Included observations: 26


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Variable Coefficient Std. Error t-Statistic Prob. C -22139.07 11991.58 -1.846217 0.0790

RPCGDP 252701.2 26302.10 9.607644 0.0000 DEPRATE -304.1817 338.6688 -0.898169 0.3793

REM -355.2419 493.2115 -0.720263 0.4793

OPEN -50519.15 14048.11 -3.596152 0.0017 R-squared 0.941039 Mean dependent var 16570.06

Adjusted R-squared 0.929808 S.D. dependent var 21967.48

S.E. of regression 5820.015 Akaike info criterion 20.34703

Sum squared resid 7.11E+08 Schwarz criterion 20.58898 Log likelihood -259.5114 Hannan-Quinn criter. 20.41670

F-statistic 83.79145 Durbin-Watson stat 1.255054 Prob(F-statistic) 0.000000

The Error Correction Model (ECM) Results

The regression coefficient of CON with respect to RPCGDP is 1.348576 in Table 6. This

has a positive sign indicating that RPCGDP has a positive effect on CON. This implies that for every 1% increase in RPCGDP, CONincreases by 1.35% and vice versa. The p-value of the

regression coefficient of RPCGDP is 0.05285. This is more than 5%. This implies that RPCGDP is not statistically significant to individually influence CON.

In table 6, the regression coefficient of CONwith respect to DEPRATEis 0.166702. This

has a positive sign indicating that DEPRATEhas a positive effect on CON. This implies that for every 1% increase in DEPRATE, CONincreases by 0.16% and vice versa. The p-value of the

regression coefficient of DEPRATEis 0.5962. This is more than 5%. This implies that

DEPRATREis not statistically significant to individually influence CON. The regression coefficient of CONwith respect to REM is 0.002559. This has a positive

sign indicating that REMhas a positive effect on CON. This implies that for every 1% increase in REM, CON increases by 0.00256% and vice versa. The p-value of the partial regression

coefficient of REMis 0.8481. This is more than 5%. This implies that REMis not statistically

significant to individually influence CON. The regression coefficient of CONwith respect to OPEN is 0.505290. This has a positive

sign indicating that OPEN has a positive effect on CON. This implies that for every 1% increase in OPEN, CON increases by 0.505290% and vice versa. In table 6, the p-value of the partial

regression coefficient of OPEN is 0.0881. This is more than 5%. This implies that OPENis not statistically significant to individually influence CON.

The coefficient of the error correction term (ECM) is negative (-8.45E-08) and it is line

with the a priori expectation that -8.45E-08 < 0. It is also significant with a very low probability value of 0.9964. The negative coefficient of the error correction term indicates that about 8.45%

of the disequilibrium in CON in the previous period year is corrected in the period. This implies that there is a long-term equilibrium between the dependent (CON) and the explanatory

variables.

The multiple coefficient of determination (Adjusted R2) is a measure of goodness of fit of the multiple regression model. It gives the proportion or percentage of the total variation in the

dependent variable jointly explained by the explanatory variables. In Table 6, the adjusted-R2 value of 0.004007 means that about 04.0% of the total variation in the dependent variable CON

is explained by the independent variables (RCPGDP, DERATE, REMI, OPEN and ECM), a fairly low value considering the fact the maximum value of R2 can at most be 100%.

The test of the overall significance of the estimated panel regression model is carried out to

examine if the all the explanatory variables are jointly significant to influence the dependent variable CON using F-test.


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Ho: All the regression coefficients are simultaneously equal to zero H1: Not all the regression coefficients are simultaneously equal to zero In table 6, the F-statistic is 1.018 and its p-value is 0.435 (less than 5%). Thus, the null

hypothesis is rejected. This implies that the independent variables are jointly significant to influence the dependent variable CON.

Table 6: ECM Results (Short Run Dynamics) for Consumption Model

Dependent Variable: CON Method: Least Squares

Date: 02/09/19 Time: 21:40 Sample (adjusted): 1992 2015

Included observations: 24 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

C 0.263605 0.094512 2.789111 0.0121

RPCGDP 1.348576 2.098054 0.642774 0.5285

DEPRATE 0.166702 0.309007 0.539476 0.5962 REM 0.002559 0.013165 0.194362 0.8481

OPEN 0.505290 0.280204 1.803292 0.0881

ECM(-1) -8.45E-08 1.85E-05 -0.004560 0.9964 R-squared 0.220527 Mean dependent var 0.310229

Adjusted R-squared 0.004007 S.D. dependent var 0.320179

S.E. of regression 0.319537 Akaike info criterion 0.768429

Sum squared resid 1.837867 Schwarz criterion 1.062943 Log likelihood -3.221149 Hannan-Quinn criter. 0.846564

F-statistic 1.018505 Durbin-Watson stat 1.882485 Prob(F-statistic) 0.435814

Summary of Findings

The preliminary analysis indicated the normality of the unconditional distribution of the variables in the CON model .The results of the ADF and PP tests for the CON model indicated that all the

variables were found to be nonstationary in levels but stationary after differencing them once, thus, intergrated of order one I(I) .The trace and Max-Eigen tests statistics in the CON model

indicated one (1) cointegrating equation at 5% level of significance respectively. The normalized cointegrating equation pointed to a positive influence of DEPRATE and OPEN on real per capita

consumption (CON), with negative correlation between RPCGDP, REM and CON. The adjusted-R2

value of 0.004007 means that about 04.0% of the total variation in the dependent variable CON is explained by the independent variables (RCPGDP, DERATE, REMI, OPEN and ECM). The R-

Squared value of 0.22 is low. The ECM shows a relatively low speed of adjustment of the short run and long run equilibrium behaviour of CON performance and its explanatory variables.

Conclusion

The study indicates the positive effects of remittances as well as other independent variables used on consumption. Remittances serves as a safety haven for recipients household since it

helps reduce poverty level through the provision of additional income. The positive impact of

openness measure on consumption is indicative of a depleting international reserves in Nigeria since both local and international goods are usually consumed in an economy.

References

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Adams, R. (2005). Remittances, household expenditure and investment in Guatemala. World

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Adida, C.L., &Girod, D.M. (2011). Do migrants improve their hometowns? Remittances and access to public services in Mexico 1995-2000, Comparative Political Studies, 44(1), 3–27.

Aggarwal, R., A. Demirgüç-Kun, M. S., & Martinez, P. (2011). Do workers' remittances Promote Financial Development? Journal of Development Economics, 96, 255-264.

Airola, J. (2007). The use of remittance income in Mexico.International Migration Review, 41(4),

850–859. Ahmad, N., Khan, Z. U., & Atif, M. (2015). Econometric analysis of income, consumption and

remittances in Pakistan: Two stage least square method. The Journal of Commerce. 5(4), 1-10

Akpan, E. (2018). Private Remittances Received and Household Consumption in Ghana (1980-2016): An ARDL Analysis with Structural Breaks. Munich Personal REPec Archive Paper No.

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Alberola E, & Salvado R.C. (2006). Banks, Remittances and Financial Deepening in Receiving Countries, A Model. Banco de Espana.

Barajas A., Chami R., Hakura D. & Montiel, P. (2010): Workers’ Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence. IMF Working Paper WP/10/287. December

Bhaskara, B. R. & Hassan, G. M. (2011). A Panel Data Analysis of the Growth Effects of

emittances, Economic Modelling, 28(1), 701-709. Castaldo, A. & Reilly, B (.2007). Do Migrant Remittances Affect the Consumption Patterns of

Albanian Households? ,South-Eastern Europe Journal of Economics 1: 25-54. Chami, R., C. Fullenkamp and S. Jahjah. (2003). Are Immigrant Remittance Flows a Source of

Capital for Development. International Monetary Fund (IMF) Working Paper No 03/189.

Washington DC. Chami, R. Barajas A. Cosimano T. Fullenkamp C. Gapen M. & Montiel P. (2008). Macroeconomic

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Propensity Score Matching Analysis. Asian Development Review. 28(2). Combes, J., & Ebeke, C. (2010). Remittances and Household Consumption Instability in

Developing Countries. Clermont Université, Université d’Auvergne, Centre d’Etudes et de

Recherches sur le Developpement International, BP 10448, F-63000 Clermont-Ferrand. Glytsos N., (1993). Measuring the Income effects of Migrant Remittances: A Methodological

Approach Applied to Greece. Economic Development and Cultural Change, vol. 42, pp. 131-168

Iheke, O.R. (2012). The effect of remittances on the Nigerian economy, International Journal of

Development and Sustainability Online ISSN: 2168-8662 – www.isdsnet.com/ijds Iqbal, Z., & Sattar, A. (2005). The Contribution of Workers' Remittances to Economic Growth in

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DEVELOPMENT AND CORRUPTION IN NIGERIA: AN INTER-RELATED CONCEPTUAL

ISSUES ADELAJA, Babatunde Joseph Department of General Studies

Hallmark University, Ijebu - Itele, Ogun State 08035535479, 08057211077

E-mail:[email protected] &

GANIYU, Rasaq Omokeji Department of Sociology and Psychology

Fountain University, Osogbo, Osun State 08037231666.

[email protected]

Abstract This paper examines the complex interaction between corruption and development, which is deeply entrenched in the Nigerian society. Although successive governments have established various anti corruption bodies to curb the menace, all failed to yield positive results. Most of these anti-corruption bodies have rather reinforced corruption in the country rather than resolving the problem. It is the position of the paper that the manner in which government managed corruption is not encouraging and is antithetical to the ideals, norms and values of criminal justices systems. It, therefore, suggests that for development to materialize in Nigeria, the body charge with the responsibility of combating corruption should follow due process and fairness at all levels and in all cases. Also, the body should be detached from the Presidency for fair, transparent and independent performance.Corruption is also destructive of governmental structure and capacity. Its diverts scarce public resources into private pockets, literally undermines effective governance, endangers democracy and erodes the social and moral fabric of a nation, It is catalyst to mediocrity, and promote ethnicity in a society such as Boko Haram. To achieve the best result from the anti-corruption programme, It is recommended that policies used in reducing corruption should take into cognizance the experience of other countries which have succeeded in their fight against corruption. Therefore, this study examined corruption and effects on Good Governance and sustainable economic development in Nigeria.

Key Words: Corruption, Development, Anti-Corruption bodies, and Transparency. Word Counts: 136

INTRODUCTION

Today, corruption has shifted from the materials acquisition and gratification to more sophisticated social evils. The menace have graduated to forgery, frauds, embezzlement of public

fund and using computer totransfer billions of naira from one account to the other from Nigeria to oversee. The overseas business corporations do not have confidence in transacting business

with genuine and reputable Nigerian businessmen. Nigeria is noted for the advance fee fraud

popularly known as 419 deals. Corruption causes a reduction in quality of goods and services available to the public, as some companies could cut corners to increase profit margins.

Corruption affects investment, economic growth and government expenditure choices; it also reduces private investment (Osibajo, 2019). Bribery and corruption, the culture of late payment,

delays or refusal of payment for services already done are scaring away British investors from

Nigeria, according to (Guilford, 2017). He notes that those who fail to pay companies for services done seem to forget that the life blood of any company is its cash flow. He argued further that

the price of corruption if poverty (Daily Trust, 2009). The widespread of “Piety” and “Grand” corruption in most Africa business environment made the international business community

regard the whole of Africa as a sinkhole that swallows their money with little or no return

(Callaghy, 1994). With the recent changes in the political economy of East Europe, the attention




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of the business has been turned to this area where reap quicker result from investments

compared to investment in Africa nations.

CORRUPTION CONCEPTUALIZED The purpose of this section of the paper is to present and examine extant literature and

scholarship on two of the central concepts of the study: the concepts of “corruption”and “development”.

Corruption can be analyzed from different paradigm of political economy perspectives. From

Olopoenia’s perspective citing Khams definition, that corruption is brought about through the economic benefits motive such as wealth, power or status as such to him corruption can be

analyzed within the paradigm of political and economic arrangement. He argued further that the

origin of corruption is located in the political and economic arrangement which govern the organization or society (Olopoenia 1998) and (Odunuga 2000). LordBryce (1986) in his own

presentation, see corruption to be behavior by individuals because of the great inequality in the distribution of wealth and political offices which is seen as the primary means of gaining access

to wealth and the absence of a strong sense of natural community.

DIMENSION OF CORRUPTION As agreed by so many sociologists, the disdain for corruption is felt mainly on ground of morality,

as such, explaining corruption would be meaningless without relating it to a kind of moral

decadence with so many concomitant attributes like conflict of various kinds, chauvinism, illegal award of contracts,oil cabals and pursuit of white elephant projects etc. Corruption inflicts so

many kinds of adverse effects on any society where it exists and persists until such society is purged of such immorality, which in turn can affect the developmental drive of the country if not

addressed on time.

CAUSES OF CORRUPTION Scholar (1997) observed that corruption can be traced to governmentintervention in the

economy, policies aimed at liberalization, stabilization, deregulation and privatization. According

to him, "where government policies are pervasive and government officials have to use their discretion in applying them. Individuals are often willing to offer bribes to officials to circumvent

these rules, and official are occasionally tempted to accept these bribes". When there are trade restrictions, especially if certain imported goods are subjected to quantitative restriction, import

licenses become very valuable and importer will consider bribing the officials who control their issue. Equally, protecting a home industry from foreign competition through tariffs tends to

create a semi-monopoly for the local industry. Local manufacturers can lobby for establishment

and maintenance of these tariffs. In the process, some industrialists may even be willing to influential the corrupt politicians in order to keep the monopoly going. Other areas where

corruption is practiced include price control, multiple exchange rate practice, natural resources endowments etc.

DEVELOPMENT CONCEPTUALIZED

The term development has been variously defined by different scholars. Due to the fact that so manyscholars like sociologists, economists and political scientists have argued in their various

fields to ascertain plausible reasons for development andunderdevelopment inherent in human

societies. Perhaps the most intriguing aspect of the situation has to do with the indices by which we sometimes measure development. They are involved at anotherlevel, in the race for further

development and this involves discovering newfrontiers of development and the process increases, as much as possible. In this situation, "development turns out to be a very vague

term". This is because, in our ever-changing world, there are no archetypes of development;

changes that areconsidered to be developmental today may be considered primitive tomorrow.

Also, what is considered being development in one place may be seen to be an index of

retrogression in another? This makes it difficult to articulate a definite concept of


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development.According to Hook (1999), development is "any change which has a continuous

direction and which culminates in a phase that is qualitatively new. Hence, the term should be used to characterized any series of events in thought, action or institutional arrangement which

exhibits a directional cumulative change that either terminates in an eventmarked off by a recognizedqualitative novelty or which exhibits in its course, a perceptible pattern of growth

(Hook, 1999). From Hooks conceptualization, it follows that the term development be applied

only to events in thought, action and institutional arrangement and that every developmental changeis purposive and intentional. It isapparent from the above that what constitutes

development is determined, in general, by human values and it is on the basis of these values that we identify a particular change.

CORRUPTION AND DEVELOPMENT

There are high levels of corrupt practices that have driven many of the people below the poverty level. People are massively affected through bad and corrupt governance as such it made

meaningful development elusive. Suffice it is to say, that the woe's afflicting most countries in

the face of development is the none presence of a democratic government and institutions through which grassroots people could be empowered and be part of the process of change as

regards to the application of cultural values to modern development.

Disconcerting media hype whips up fear that Africa enmass will be driven by poverty to the rich countries. The changes in the world financial techniquesand the process of globalization many

argue have left Africa stranded in various developmental processes. Also, the Africa continents are mostly run b a notoriously undemocratic elite and inefficient bureaucracy has stripped the

continent further through the structural adjustment and failing nation state-crippled by

debt.Inthis stereotyping situations, it is mostly difficult for meaningful African's future development. The business sectors shy away and doom seems to surroundAfricans and their

continent (Richard,1996).

CONSEQUENCES OF CORRUPTION ON DEVELOPMENT Many studies have been conducted that show the negative consequences of corruption.

Corruption has taught Nigerians a dangerous and wrong lesson that to be honest, hardworking and law abiding does not pay. Through corrupt means, many political office holders acquire

wealth and properties in and outside Nigeria and also display such wealth, which is beyond their

means, but the society does not blink. This has made politics a big business in Nigeria, because anything spent to secure a political office is regarded as an investment, which matures

immediately one gets into office (Guardian, 2002). Thus the negative or effects of corruption could be given as follows:

1. Corruption breeds nepotism and inefficiency.

2. Corruption leads to possible distortion of information. 3. Corruption can tarnish the image of a country.

4. Corruption makes public policies ineffective. 5. Corruption upsets ethnic balance, and exacerbates problem of national integration in

developing countries. 6. Corruption reduces private investment.

7. Corruption discourages honest efforts and valuable economic activities.

8. Corruption affects investments, economic growth and government expenditure choices. 9. Corruption is politically destabilizing, as it leads to social revolution and military takeover.

CONCLUSION ANDRECOMMENDATIONS

The endemic prevalence of corruption in the country and its debilitating consequences on the economy and the society in all conceivable respects as fuel and made concrete development

eroded the nation. The failure as well as the futility of existing control measures and mechanisms is not helping the situation. The thrust of these at providing political, economic and socio-cultural

environment which can reduce the disposition towards, and opportunities for, corruption and


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related manifestation, and they contain measures aimed atimproving laws against corruption as

well as enhancing the enforcement of such laws. Corruption in Nigeria manifest itself in virtually all aspect to national life it has cripple the encumber of the local; state and fedral government.

Nigeria is one of the state in Africa that have identify as being corrupt, the corruption percentage degree continue to grow. Virtually, every administration profess and swear to control corruption

yet the problem continues unabated. Corruption’s under military reach highe chelon and weaken

the fabric of the nation. The present civilian administration has also embarked on anti-corrupt crusade, how successful this would be only time can tell. However, this hydra cancer needs to be

controlled to save the nation of international dissgrace and national calamity.

REFERENCES Hook, H. (1999). The Culture of Development in Viewpoint: A Critical Review of Culture and

Society. Vol. No.1 and 2. Hope publication Kalu, O.& Yemi, O. (1999). Sociologic Introduction in Nigeria. Samech CommunicationsLord, B.

(1986). An Historical Introduction to Modern Philosopher. New York.

Mauro, S. (1997). The Idea of Development: A Philosophical Analysis of Nigeria. SmatechPublication.

Odekunle, F. (1991). Effective and Efficient Implmentation in Nigeria, Recent Anti-Corruption Legislature.

Odunuga, S.(2000). The Impact of Corruption and Organized Crime on Nigeria Economy and

Economic Development. Similar paper presented at ACDESS. Olopeonia (1998). African Concord Magazine, April 13.

Opafola, S.O.(1997). The Idea of Development: A Philosophical Analysis of Nigeria. Smatech publication.

Richard, J. (1996). Which Way Africa. The Society for International Development, NewYork.

Scholar, K. (1997). Nigeria Survey of Corruption. The Economist, January 15-21, London.


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ENTREPRENEURIAL MARKETING AND SMALL AND MEDIUM ENTERPRISE

PERFORMANCE IN OGUN STATE EKPUDU, Jonathan Ehimen

Department of Business Administration, College of Management Sciences, Federal University of Agriculture, Abeokuta, Ogun State, Nigeria

E-mail: [email protected]

OYALAKUN, Daniel Oluwaseun Department of Business Administration, College of Management Sciences,

Federal University of Agriculture, Abeokuta, Ogun State, Nigeria E-mail: [email protected]

BAKARE, Taoheed Olutunde

Department of Business Administration, Faculty of Management Sciences, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria

E-mail: [email protected] AKINLEYE, Toye Samson

Department of Business Administration, Faculty of Management Sciences, OlabisiOnabanjo University, Ago-Iwoye, Ogun State, Nigeria

E-mail: [email protected]

Abstract The study examined the relationship between Entrepreneurial Marketing(measured by customer relationship management and market segmentations) and Small and Medium Enterprise (SME) performance (measured by customer patronage and SMEsexpansion) in Ogun State, Nigeria. The population for this study consists of 593SMEs in Ogun State, Nigeria.The sampling method used by the researchers is both simple random sampling and the stratified sampling technique in which 270was used as the sample size. The survey research design was adopted in carrying out the study, through the administration of structured questionnaire to selected SMEs in Abeokuta. Two hypotheses were formulated and Pearson correlation analysis was employed to ascertain the association between entrepreneurial marketing and SMEs performance. The findings revealed that effective customers relationship management is positively associated with customers patronage of SMEs in Nigeria (r = 0. 801, p-value<0.05); while, market segmentation is positively associated with SMEsexpansion in Nigeria (r = 0.614, p-value<0.05). It is therefore concluded that entrepreneurial marketing is strongly associated with SMEs performance. The researchers recommend that Entrepreneurs should ensure active operation of entrepreneurial marketing so as to improve the performance of the SMEs. Keywords: Entrepreneur, Marketing, Entrepreneurial Marketing, SMEs, SMEs Performance

1. Introduction

Until recently, marketing and entrepreneurship existed as two distinct disciplines in the academic settings. In general, entrepreneurship can be described as the process of identifying and starting

a business venture, taking both the risks and rewards associated with that venture within a

specific period. Whereas, marketing mainly focuses on the understanding of the practices and processes generally within large establishment. However, with a rapid growing interest in the

SME sector, the marketing aspects of SMEs and entrepreneurship have also increased in importance, the link between entrepreneurship and marketing in SMEs is what is called

Entrepreneurial Marketing, “The term Entrepreneurial Marketing is used to describe the marketing processes and practices of firms pursuing opportunities in uncertain market

circumstances, often under constrained resource conditions” (Rashad, 2018).

Entrepreneurship is the process of identifying, developing, and bringing a vision to human life. The vision may be an innovative idea, an opportunity, or simply a better way to do something.

Entrepreneurship takes a variety in both small and large firms, in new firms and established ones, in the formal and informal economy, in legal and illegal activities, in innovative and more

conventional business ventures. Entrepreneurship is one of the most powerful drivers of



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growthand prosperity in the modern global economy, this is important to understand the concept

of entrepreneurship. Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled (Timmons, 1994;Tulung,Saerang,

&Pandia, 2018). Entrepreneurial Marketing(EM) is the innovative, opportunity seeking approach most

entrepreneurs and small and medium enterprises (SMEs) utilize when marketing their businesses.

EM has been categorized by its innovative value creation, external focus and readiness to take risks (Ismail &Zainol, 2018).The concept of entrepreneurial marketing Entrepreneurial marketing

has created an opportunity for the development of several research streams, which consequently resulted in different views and definitions of EM concept (Dushia, Danab&Ramadania,

2019).Entrepreneurial Marketing practices have been identified as one of the most important key

ingredients for superior performance and global competitiveness in SMEs (Junde, 2014). Firm performance (the strategic outcomes that organizations use to realize its goals) has therefore

been established as a focal phenomenon in business studies. SMEs performance is therefore a complex and multidimensional phenomenon that has been established to directly depend on

efficient marketing practices. It is critical for small and medium-sized enterprises to understand which entrepreneurial

marketing practices are most effective and therefore important to achieve competitive advantage

and ultimately for improved performance. To survive and win, a firm has to gain an advantage over its competitors and earn a profit (Otika, Nwaizugbo&Olise, 2019). The various backgrounds

on the presence of small and medium enterprises make their orientations to the market and their strategic actions in dealing with the business environment also different (Rekarti&Saluy, 2018).

At any developed countries one of the main priorities in implementing activities of the country is

national development, this is also the case for Indonesia country. One of the things that be given attention to national development in Indonesia is in the economics. One of the potential in each

region is the presence of Small and Medium Enterprises (SMEs) (Mohammad, Massie &Tumewu, 2019). SMEs are considered to be significantly important to contributors to economic

development, particularly in regards to providing jobs and employment opportunities; and

generating income for many households (Kongolo, 2010, Saerang, Tulung&Ogi, 2018).

Statement of the Problem The contributions of SMEs in economic development of both developed and developing nations

have always been acknowledged (Aliyu&Mahmood, 2014 and Junde, 2014). But as Ediri (2014) opines, SMEs can only maintain such a position when a good number of strategies including the

formulation and application of appropriate entrepreneurial marketing practices are put in place at

the right time and in the right proportion to exert positive effect on performance. Small and medium scale enterprises (SMEs)in developing parts of the world face several resource

constraints (Acheampong& Hinson, 2019). Most writers on SMEs in Nigeria have not given the marketing practices of these classes of

organizations the necessary focus as their writings have always centered on the principles that

should be adopted at the expense of the practice in place. As such the works of Oshamwoi (1983) and Udendeh (2006) placed emphasis on principles and expected procedures at the

expense of marketing practices in SMEs. Entrepreneurial Marketing practices however differ from continent to continent, countries to countries, cities to cities and sector to sector in relation with

social, cultural and economic backgrounds of every given area (Ghouri, Khan, Malik, and Razzaq, 2011). Even in the same company, different approaches of entrepreneurial marketing practices

are used in different dimensions and phases of the company’s life (Gummesson,

Kuusela&Narvanen, 2014). The differentiation of entrepreneurial marketing among space, time and effectiveness of marketing practices could be the distinction for any firm or business in a

particular environment (Kelson, 2014). Although some researches have been conducted on the effect of EM practices on the

performance of SMEs (Mba&Emerti, 2014), most of these studies were done many years ago.


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With changes in environment, globalization, technology business and even EM practices, there is

need to conduct a similar research that keeps trends with development that reflect the reality of the present time. This study therefore, seeks to ascertain the actual relationship that

exitsbetween entrepreneurial marketingand the performance of SMEs inOgun state in Nigeria.

Research Hypotheses

Hypothesis One:There is no significant relationship between customer relationship management and SMEs customer patronage.

Hypothesis Two: There is no significant relationship between market segmentation and SMEs expansion.

2. Literature Review Entrepreneurial Marketing (EM)

Entrepreneurial marketing can be defined as a mindset that is derived from entrepreneurial practice and acts that do not follow the formal marketing practices. Given that various different

conceptualizations are formed for entrepreneurship and marketing, numerous definitions for entrepreneurial marketing exist (Ismail &Zainol, 2018).

EM is commonly defined as “proactive identification and exploitation of opportunities for acquiring

and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation" (Morris, Schindehutte&LaForge, 2002).In the definition of EM by

Morris et al. (2002), the authors correlated the seven dimensions as the core of the EM, these seven dimensions are proactive orientation, calculated risk taking, innovativeness, opportunity

focus, resources leveraging, costumer intensity, and value creation (Morris et al. 2002).

Entrepreneurial marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in

ways that benefit the organization and its stakeholders, and that is characterized by innovativeness, risk-taking, pro-activeness, and may be performed without resources currently

controlled (Kraus & Fink, 2010).Entrepreneurial marketing have been identified as one of the

most important keyingredients for superior performance and global competitiveness in small and medium-sizedenterprises (Junde, 2014).An understanding of Entrepreneurial Marketing (EM) is

clearer when marketing and marketing practices are properly conceptualized since the two concepts come together to form one (Sunday &Agbo, 2015).

Variables of Entrepreneurial Marketing

A good number of EM practices exist in the business world however, variables of EM practices

(Independent variables) whose effect is assessed against SME performance (Dependent variables) in this study include; Customer Relationship Management (CRM), market

segmentation, co-opetition, quality and promotion. The choice of these EM practice variables is informed by the researcher‘s discussion with SMEs operators and extensive review of related

literature. Besides, similar research studies used some of the EM practice variables against

business performance. Ghouri, Khan, Malik and Razzaq, (2011) studied Marketing practices and their effects on firm‘s performance in Karachi, Pakistan. The research study used market

segmentation and market promotion as some of the EM Practice variables. Customer Relationship Management (CRM)

Writers diverged in formulating a specific definition for CRM. This divergence may be owed to differences in the scientific background of these writers. For example Al-Khouri, (2012) defined

CRM as a business strategy, which aims to understand, anticipates and manages the needs of the

organizational current and potential customers. He described CRM as a journey of stages; strategy, process, organizational and technical change whereby a company seeks to better

manage its own enterprise around customers behaviors so as to acquire, retain and grow profitable customers. In the views of Wang and Feng (2012), CRM is a comprehensive strategy

and process that enables an organization to identify, acquire, retain and nurture profitable


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customers. Shrivastava and Kale, (2003) add that CRM is a core organizational process that

focuses on establishing, maintaining and enhancing long term associations with customers as advocated by relationship marketing.

Market Segmentation Market segmentation involves the grouping of customers with similar needs and buying behavior

into segments, each of which can be reached by a distinct marketing programme. The underlying

aim of market segmentation is to group customers with similar needs and buying behavior into segments, thereby facilitating each segment being targeted by a distinct product and marketing

offerings to be developed to suit the requirements of different customer segments (Quinn, 2009). A good number of definitions have been used in literature to describe the concept of market

segmentation. Some have perceived it as the process that a company adopt to divide the market

into distinct groups on the basis of needs, wants, behaviour or taste for its different products or services; (Verhoef, Spring, Hoekstra &Leeflang, 2002).

Fig 1.The Entrepreneurial Marketing Implementation

Sources: Utami, 2019

SME Performance SMEs in emerging economies may have more fundamental problems than those in developed

countries (Games, 2019).Performance is a latent construct which is having various meaning in the academic literature and normally, SME performance refers to the firm’s significant results in

terms of efficiency of investment, effectiveness of strategies, achieving customer satisfaction,

increasing market share, growth, & returns and which are formed by taking a complex series of actions that assimilate skills and knowledge (Hoque&Awang, 2019). Hence, Obiwuru, Okwu,

Akpa, &Nwankwere (2011) stated that SME performance declares, how good a firm is carrying out. In this study, customer patronage and business expansion shall be used to measure SMEs

performance. Theoretical Review

Resource-Based View (RBV) Theory

Although EM fits with a number of theoretical foundations, it is especially consistent with the Resource-Based View (RBV) theory of the firm and the Resource-Advantage (R-A) theory (Aliyu,

2014). The two theories were used to underpin this study with a major focus on how a firm resource or knowledge develops and affects its performance (Kanyabi& Devi, 2012). The decision

to use more than one theoretical framework in this study is premised on ensuring that any

weakness that may emanate from any of the theories used, it will be covered by the strength of the other theory (Igbe, 2014).


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The RBV of the firm which was first coined by BirgerWernerfelt in 1984 (Yahya, 2014) attempts

an explanation of the relationship between the firm resources and sustenance of modest advantage of superior firm performance (Ringim, 2012) and provides a theoretical ground for the

assessment of the firm‘s specific factors that affect their performance and if any of these factors is lacking the performance of the firm will be affected (Aliyu, 2014). It describes a firm as a

unique bundle of tangible and intangible resources (assets, capabilities, competencies,

organizational processes, firm attributes, information and knowledge and so forth) that are controlled by the firm (Barney, 1991). These resources enable a firm to implement strategies

designed to improve its efficiency and effectiveness (Barney, 1991). The resource-based view suggests that valuable firm resources are usually scarce, imperfectly imitable and lacking in direct

substitutes. Afirm's resource must have four attributes: 1) it must be valuable; 2) it must be rare

among a firm's current and prospective competition; 3) it must be imperfectly imitable; and 4) it cannot be substituted for strategically equivalent resource (Barney 1991).

According to the Resource Based View theory, organizations can have competitive advantage through the development of resources that are peculiar and diversely distributed (Aliyu&

Mahmoud, 2014). It holds much promise as a framework for understanding strategic marketing issues. Similarly, understanding SMEs resource base is central to effective positioning of the

business to optimize the usage of its scarce resources which will brings about competitive

advantage.

3. Methodology The data was collected through the administration of questionnaires to respondents’. Small

andMedium Enterprises Development Agency of Nigeria in conjunction with Nigerian Bureau

ofStatistics (NBS) in 2013 gave the population of registered SMEs in Ogun State as 593 whichform the basis of the population for this study. Two hundred and (270) was used as the

sample. The sampling methods used by the researchers areboth simple random sampling and the stratified sampling technique. The questionnaire was well structured and was in line with the

objectives of the study which was responded to by the SMEs owners in Ogun State.

4. Data Analysis and Hypotheses Test

Test of Hypotheses In the course of this research work, three hypotheses were tested. Findings and conclusion from

the analyzed data, hypotheses are tested at 0.05 level of significance. Hypothesis One

H0: There is no significant relationship between customer relationship management and

SMEs customer patronage.


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Table 1Correlations

Customer relationship

management

SMEs Customer

patronage

Customer relationship

management

Pearson Correlation 1 .801**

Sig. (2-tailed) .000

N 250 250

SMEs Customer patronage Pearson Correlation .801** 1


N 250 250

**. Correlation is significant at the 0.05 level (2-tailed). Decision Rule

If the P-value is less than 5% (P<0.05), then the null hypothesis is rejected. Otherwise it is accepted.

Interpretation of Result

The result above illustrates the Pearson’s Correlation r = 0. 801 computed for relationshipbetween customer relationship management and SMEspatronage with p-value<0.05.

This hypothesis is thereforerejected and this confirms that there is a significant relationship between customer relationship management and SMEs customer patronage.

Hypothesis Two

H0:There is no significant relationship between market segmentation and SMEs expansion.

Table 2Correlations

Market

segmentation SMEs expansion

Market segmentation Pearson Correlation 1 .614**


N 250 250

SMEs expansion Pearson Correlation 614** 1


N 250 250

**. Correlation is significant at the 0.05 level (2-tailed).

Decision Rule If the P-value is less than 5% (P<0.05), then the null hypothesis is rejected. Otherwise it is

accepted.


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Interpretation of Result

The result above illustrates the Pearson’s Correlation r = 0.614 computed for relationship between market segmentation and SMEs expansions with p-value<0.05. This hypothesis is

therefore rejected and this confirms that there is a significant relationship between market segmentation and SMEs expansion.

Discussion of Findings It is evident from the findings that there is a positive relationship between customer relationship

management and SMEs performance. This implies that understanding the way entrepreneurial marketingworks and inducement of this consumers tends to enhance SMEs’ performance which

might be in the form of recognizing the customers relationship management and . Furthermore,

the existence of strong positive association was equally established between entrepreneurial marketing and SMEs performance in Nigeria. This implies that an enhancement in the

entrepreneurial marketing tends to lead to ensure the SMEs performance.

5. Conclusion and Recommendation Based on the outcome of the two hypotheses which were empirically tested and the research

finding stated earlier in this study, the researcher therefore, concludes that there is a significant

positive relationship between entrepreneurial marketing and SMEs Performance. Based on the findings of this study the researcher recommends that:

1. SMEs owners should pay more attention on the customer relationshipmanagement to ensure high rate of customers patronage.

2. Entrepreneurs should establish and implement an effective market segmentations bases on the

needs of the potential and existing consumers. 3. For SMEs performance, entrepreneurs should ensure that entrepreneurial marketing practices

are properly implemented.

Suggestion for Further Studies

There is need to replicate this study in multinational cooperation and a larger sample size is also recommended.

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CORPORATE IMAGE AND CUSTOMERS’ VALUE IN THE NIGERIAN

TELECOMMUNICATION INDUSTRY

AGBI Babatunde Daniel (Ph.D)

Department of Business Administration, ChrislandUniversity, Abeokuta, Nigeria

Email: [email protected]

Abstract The study investigated the relationship between corporate image and customer value in the telecommunication industry in Lagos state. Primary data was obtained through a structured questionnaire. 600 questionnaires were administered to the subscribers of the four major GSM providers in Lagos State. 580 of the questionnaires were returned, properly completed. The questionnaires were analyzed using SPSS 22 version. Multiple regression analysis was used to determine the relationship between the independent variable (customer value) and dependent variable (corporate image) of the study. The findings revealed that corporate image has no significant relationship with customer value in the telecommunication industry in Lagos.

Keywords: corporate image, customer value, telecommunication industry

1. Introduction

Organizations are often concerned with how their corporate image is perceived by the public especially its customers hence they desire to manage it.Formbrunand van Riel, (1996) defined

corporate image as “the overall estimation in which a company is held by its constituents through perceptual representation of an organization’s past actions and future prospects when compared

with other leading rivals. Villanova, Zinkhan and Hyman (2000), believe corporate image is an

overall perception of the company held by different segments of the public

Corporate images are perceived as the mental pictures of an organization. And it is the sum total

of these perceived characteristics of the corporation that we refer to as the corporate image.

Rayner (2003), submits that corporate image confers clear-cut advantages and privileges on companies. Meanwhile the mental picture which customers have about an organization to a large

extent may affect how they perceive the value they receive. Customer value is the perception held by a customer on whether the product or service is beneficial or not. Graf and Maas (2008)

believe customer value is at the heart of contemporary successful companies by focusing on

fulfilling customers’ desires and expectancy thereby delighting them and obtaining their loyalty.

Customer value can be viewed from two perspectives. These are from the company’s perspective

and customer’s perspective. From a company’s perspective customer value plays a critical role in

delivering value and managing customer behaviour has assume a significant role especially for the long-term organizational survival and growth. It is also important in identifying and

evaluating profitable customers (customer lifetime value, CLV) or customer group (customer equity) in growing and sustaining profitable relationships with customers. Furthermore, customer

value enables companies to be customer centric.

The telecommunication industry in Nigeria is enjoying astronomical growth due largely to privatization and liberalization. There are 172,668,626 active subscribers of Global System of

Mobile Telecommunication (GSM) lines in Nigeria as August, 2019 (NCC, 2019). With this huge

customer base and the competition amongst network service providers it has become very crucial to gain and maintain competitive advantages. However, gaining competitive advantage may have

to depend on the perception of customers hold with respect to the organizations corporate image. The study therefore will seek to explore the connection between corporate image and

customer value in telecommunication industry in Lagos state.

Meanwhile, the relationship between customer value and corporate image has thrown up conflicting outcomes. Wang and Chaipoopirutana (2014), Kandampully and Suhartanto (2000),

Chun and Davies (2006) investigation indicate the existence of significant relationship. However,



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studies by Bloemer, Ruyter and Peeters (1998), Ball et al. (2004), Muhammad (2012) recorded a

negative relationship between corporate image and customer value. The study will test these assertions in a Nigerian environment to support, reject or modify previous understanding. The

specificobjective of the study was to investigate the relationship between customer value and corporate image in the telecommunication industry in Nigeria.

2.Review of Literature

Concept of customer value Customer value can be described as the linkage between benefits and sacrifices and paying

attention to the performance characteristics of goods/services.Kotler and Armstrong (2010) and

Woodruff (1997), believe customer value is not only very important because it is considered as the essence of marketing, but that it is also well adopted in other fields such as finance,

management, economics, sociology, psychology and so on. Indeed Slater (1997:166), argued that “. . . the creation of customer value must be the essence of the firm’s existence and

certainly plays a critical role in its success”.

In the telecommunications industry customer value will be determined by evaluating those services that benefit the customers such as ease of making connection, call rates,

discount/bonuses enjoyed, network availability and so on and measure them against the sacrifice or cost of obtaining benefits such as drop calls, high cost of recharge cards, price of Sim cards

and promptness in resolving complaints.

Determinant of customer value Factors that support value creation are varied and changing as they evolve and manifest over

time (Johnson, Herrmann, & Huber, 2006). Different studies such as Ganesan (1994), Mittal,

Ross and Baldasare (1998), Geyskens, Steenkamp and Kumar (1999) and Mittal and Kamakura (2001) have proposed different composite of variables that are germane to customer value

creation. Clottey, Collier and Stodnick, (2008) argued that though several factors influencing customer value have been recognized but there still exists a clear absence of unanimity on the

acceptable ones that can be applied to different sectors. This situation therefore poses a

challenge that requires a systematic approach in identifying critical influencers of customer value which is the core of this study. The factor that is of interest to the study is corporate image which

is discussed as follows:

Corporate image Corporate image is conceptualized as the humanization by stakeholders especially the perception

which customers have in their memory towards an organization. It is linked to the peculiarities of the company, such as company’s name, architecture, the kind and quality of products and

services (Wang, 2010). Corporate image has also been defined as the overall impression made

on the minds of the public about a firm (Kotler & Armstrong, 2010). However, Kandampully (2007) identified two categories of corporate image which are functional and emotional. The

functional entails the physical attributes that can be aggregated and estimated readily. The other component is emotional which includes the consciousness, philosophy and confidence that one

has for the organization. These emotional elements are nonetheless the resultant effect of the incremental experiences the customer had with the organization over a period of time.

Customers’ perception of the quality of the service provided by telecommunications companies is

influence by corporate image they have of the organization. This to a large extent is dependent on the customers’ perceptions of the organization’s competence and level of community support

(Nguyen & Leblanc, 2011). Competence here is understood to mean the corporate capability of

the company in delivering goods and service offerings through creativity and superior service quality. Community support or corporate social responsibility in this regard is the company’s

participation and contribution to its immediate community or environment.


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Theoretical Framework

The study adopts signaling theory to explain how customers form perceptions that define how they perceive the organization. The theory was propounded by Michael Spence in 1973 to explain

how organizations send signals (information) to customers to explain precisely the quality of the products companies offered to their customers. It is directed at conveying positive information

about an organisation’s attributes to the general public. Such information often includes research

and development activities or sales and marketing strategies of the organization.

Signaling theory is basically focused on achieving a balance in information dissemination between

two parties (Spence, 2002). For example signaling theory is useful as it makes available a

structure that helps in describing the empirical relationship between corporate image and customer value (Erdem&Swait, 2004). Researchers are adopting signaling theory to describe the

impact of information imbalance in contemporary studies. Zhang and Wiersema (2009) explain that some recent studies indicate that organizations besides statutory requirements often publish

their financial statement to covey messages of financial strength to potential investors. Another is

the heterogeneous composition of company board members which sends a signal of compliance to social values to different stakeholders (Miller &Triana, 2009).

In Nigeria for examplelimited liability companies select their board members from different

sections of the country to communicate compliance to Federal character requirement. The theory therefore enables organizations to effectively communicate through deliberate actions to convey

positive organizational signals that will enhance its reputation and capability in the estimation of its stakeholders and the general public.Customers analyze these signals in determining the

quality and value of the indeterminate services provided by the firm (Teas & Agarwal, 2000).

Furthermore, previous studies that use signaling theory to explain an internet based business reports that estimation in the minds of the customers is of essential consideration in their

decision making process of choosing product quality of a web-based retailer (Chen & Dubinsky, 2003; Kwon & Lennon, 2009). In this wise, it could be assumed that a positive corporate image

will help to advance and strengthen customer value and by extension customer loyalty in any organization.

3. Methodology

The study is on the determinants of customer value. Subscribers of Global System of Mobile Telecommunication (GSM) specifically those on voice activated module are the focal point. Data

were collected from subscribers in Lagos state, in South-western Nigeria. The choice of Lagos

was informed by its cosmopolitan nature and also as the commercial hub of Nigeria. It is also the most populated city in Nigeria with the highest GSM subscribers (NCC, 2015). The population of

the study consists of GSM subscribers of Airtel, MTN, GLO and Etisalat (9Mobile). The total active subscriber base as at August, 2019 is 172,668,626 (NCC, 2019). However, due to the fluid nature

of subscribers such that lines can be acquire without regard to location specificity, it is difficult to

determine the subscribers that resides in each state. Besides there is also the challenge that a subscriber could carry more than one line. But nonetheless from the information the researchers

gathered from officials of the network service providers and also from NCC website Lagos statehas appropriately 35% of the total subscribers in Nigeria. Hence the study will assume the

population of the study to be 60,434,019. The sample size of the study was determined using Taro Yamane’s formula which is the

application of normal approximation with 95% confidence level and 5% error tolerance. The

formula according to Guilford and Fruchter (1973) is given as:

𝑛 =N

1+N(𝑒2) (3.1)

Where:

N= population = 60,434,019 n = sample size

e = level of significance = 0.05


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𝑛 =N

1 + N(𝑒2) =

60,434,019

1 + 60,434,019(0.052)= 399.99 ≅ 400

Although the formula estimated the sample size to be 400, the study administered 600 questionnairesto respondents drawn from the subscribers of the four network service providers.

Additional 200 respondents were however added to the estimated sample size of 400 because the study assumes anenough buffer can compensate for a possible 50% non-response rate. The

instrument of the studywas subjected to face and content validity, wherein a number ofmarketing

experts, and senior academics were consulted, to offer suggestions. This helped the researcher in making certain that the instrument indeed factored in the entire content area of the study and

determine if the instrument captured the representative sample of the content been measured. It is important to emphasize that the researcher also authenticate the appropriateness or otherwise

of the format used in creating the instrument. This helps to confirm that the instrument is

adequate and efficient enough to capture the necessary details from all the subscriber respondents. To test the reliability of the research instrument fifty questionnaires were

administered in a trial run exercise to evaluate its reliability. The data collected were subjected to a reliability analysis to determine the reliability of the measures and to ensure dependable

measurement among the various items in the instrument which was satisfactory.

The research instrument consisted of two sections (bio-data and research questions). The section on research questions is further categorized into customer value section and the section

containing the dimensions of corporate image questions. To measure and develop the constructs,

statements were used and the responses to each statement were scored on a 5-point Likert scale which we believe will reflect the level of agreement of the respondents to the questions posed to

them. Strongly agree, agree, neutral, disagree and strongly disagree will be score 5, 4, 3, 2, 1 respectively.580 questionnaire were completed and returned, representing 97% return rate. The

study employed simple percentage, frequency tables and mean in analyzing and interpreting the data obtained.

Based on the study objectives, multiple regression analysis was adopted to ascertain the factors

that determine customer value. Tests of significance of the regression coefficients of the model would lead to the acceptance or rejection of the hypotheses concerning the relationships

between the independent variable corporate image and (dependent variable) customer value in

the telecommunication sector in Lagos state at 5% level. All tests of significance were carried out at 5% level of significance using Statistical Packages for Social Sciences (SPSS) version 22.

Corporate image was computed by taking the average of the weighted mean score for each item measuring the variable.

Dimensions of Corporate Image

There are few measurement methods in literature such as the six factor dimension comprising dynamic (flexible, progressive, focused etc.), cooperative (friendly, well-liked and courteous),

business-wise (astute, credible, well-organized etc.) character (ethical, honest, deferential etc.)

successful (financially strong, positive, self-image etc. and withdrawn (secretive and reserved). Although this last factor is considered as the weakest of the link. However, Fombrun and Van

Riel (2004) believe the Reputation Quotient (RQ) approach appears to be the most popular in academic which is often adopted to obtain data on company’s image from the perspective of

multiple stakeholders. The RQ model measures perceptions of an organization in terms of social

expectations of six dimensions such as goods and services, emotional appeal, vision and leadership, financial achievement, working environment, and social responsibility (Fombrun,

Gardberg, & Sever, 2000). The study adopted a combination of dimensions from the six-factor dimension and the Reputation Quotient approach in designing the measurement instrument.


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4.0 Data presentation and findings

Corporate image Mean SD

1 My network service provider is dynamic (active) 3.94 1.035

2 My service provider is well-organized (business-wise) 3.86 1.026

3 My service provider behaves ethically (character) 3.71 1.055

4 My network service provider is financially strong 3.89 1.082

5 My network service provider is socially responsible 3.78 1.083

6 My service provider is excellent 3.64 1.161

3.80

Multiple regression showing the relationships between customer value and corporate image

Dependent Variable: CUSTOMER_VALUE

Variable Coefficient Std. Error t-Statistic Prob.

C 0.686588 0.137074 5.008893 0.0000

CORPORATE_IMAGE 0.015182 0.039000 0.389279 0.6972

R-squared 0.4727 Observations 516

Adjusted R-squared 0.4686 Durbin-Watson stat 1.9775

F-statistic 114.53 Prob(F-statistic) 0.0000

Source: Author’s computation (2018)

The above regression result shows the relationships between customer value and corporate

image. When the independent variable corporate image was regressed on customer value, the coefficient of determination (R2) value is 0.4727. The value of the Adjusted R2 of 0.4686 shows

that the independent variables corporate image explains 47% of the variation in the dependent variable customer value. The result also reveals that corporate image is not statistically significant

because p value is greater than 5% (ρ =69.72%). Furthermore, the Durbin-Watson statistic of

1.9775 reveals the absence of first order serial correlation.

Discussion of findings

The study reveals that corporate image has no significant relationship with customer value in the

telecommunications industry in Lagos state as the coefficient is almost zero. This finding is not unrelated to the subjective nature of individual perception of what they view as an acceptable

corporate image. Brown and Dacin (1997) argued, that an organization’s reputation or image is not uni-dimensional, ‘good’ or ‘bad’. Companies may have the same overall degree of

favourability, but their character might not be the same. For example company ‘A’ may be seen as

an ‘innovator’ but may not be ‘socially responsible’: is this good or bad? Or company ‘B’ may be considered ethical or socially responsible but may not be technically robust or even dynamic: is

this good or bad?

The finding of the study is consistent with some previous study carried out by Bloemer, et al (1998) in the banking industry in the Netherlands which reported that an indirect relationship


135

exists between corporate image and customer value though they admitted that it is mediated by

service quality. Similarly, Ball et al. (2004) recorded that although, there is a significant association between corporate image and customer value, and it is indirect in nature as

satisfaction and trust mediate the relationship.

However, our review of extant literature reveals inconsistent results. This is so because while some studies have found a significant relationship between corporate image and customer value

other scholars got contrary outcomes. Nguyen and Leblanc (2011) believe corporate image relates

positively with customer value in four sectors (telecommunication, aviation, retailing and education). Also, while examining airline services Andreassen and Lindestad (1998) suggested that

positive experience after a period of time will in due time leads to positive image which has effect on customer’s evaluation of service quality, fulfillment and customer value. Similarly, Nesset et al.

(2011) and Ladhari et al. (2011) believed that corporate image has a positive relationship with behavioral intentions in retailing and banking industries respectively. Srivastava and Sharma

(2013) arguedthat corporate image affects repurchase intentions in mobile services, whileJani and

Han (2014) believe that same relationship exist in the hotel industry. Equally Groholdt, Martensen, and Kristensen (2000) found that corporate image has significant relationship with customer value

and loyalty in the beverage, banking and telecommunications sectors while Liu (2008) believes corporate image has a significant influence on customer value, satisfaction and loyalty in the

Chinese telecommunication industry. These contradictory outcomes Brown and Dacin, (1997)

argued is because corporate image is not uni-dimensional meaning it cannot be measured by adopting a narrow prism of good or bad approach. They stressed that factors responsible for

corporate image are complex and require a multi-dimensional method in the sense that an organization may be considered highly competent or dynamic but weak on character

issues.Meanwhile, Chun and Davies (2006) argued that establishing positive corporate image is a key success factor in customer retention in the Taiwan telecommunication industry. From the fore

going, this study is of the view that corporate image is very critical to any organization in the long

run and is a key determinant of customer value with a mean value of 3.80 in the telecommunications industry in Lagos.

5. Conclusion and Recommendations

The findings of the research indicate that customer value is high in the telecommunication industry in Lagos.The study however believes that although corporate image may not necessarily

be significant in how customers perceived the value they are receiving, it will serve a useful

purpose if subscribers have a favourable perception towards the corporate image of the company. Furthermore, it might seem that positive corporate image may lead to customer loyalty

and retention thereby improving market share and profitability. Network service providers should ensure that corporate image is continually improved upon. The service providers should endeavor

to present a consistent positive corporate image so as not to be seen to be socially irresponsible or insensitive to the society. This is so because ultimately a good or favourable corporate image

is still preferable to a negative or bad image.

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