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European Journal of Business and Management

www.iiste.org

ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

Production Improvement Function and Equity Capital of Firms in
the Nigerian Manufacturing Industry
1

*G.I. Umoh, 2Ify Harcourt Wokocha,
Management Department, Faculty of Management Sciences,
University of Port Harcourt, Port Harcourt. Nigeria.
2
Office Technology and Management, School of Management Sciences,
Rivers State College of Arts and Sciences, Rumuola Port Harcourt
*
godaks5@yahoo.co.uk
1,

Abstract
This paper investigates the extent to which Production Improvement Function, had affected the Equity Capital of
firms in the Nigerian manufacturing industry. Three hypotheses were formulated and copies of questionnaire
were distributed to eighty respondents in the eighty sampled manufacturing firms from the one hundred in the
industry, that are quoted in the Stock Exchange(Fact Book 2009). Sixty two copies of the questionnaire were
retrieved. These with the financial statements of the firms were used for the analysis. From its findings, the study
revealed that production planning and control have significant impacts in enhancing the equity capital of firms in
Nigerian manufacturing industry; while production scheduling has an insignificant influence on equity capital
alone. This finding implies that production improvement function significantly affects the equity capital of firms
and therefore provides evidence for the claims of Olusegun and Adegbuyi(2010); Olarenwaju(2010);
Poterba(2006); and Ikan(2003). Based on these, the study recommends among others, that the Nigerian
manufacturing industry should efficiently and effectively operationalize the all embracing production
improvement function, especially in the area of production scheduling, in order to restore the industry as the base
of all investment and hence development.
Keywords: Production Improvement Function, Enhanced Equity Capital, production scheduling.
1.0 Introduction
Since the advent of the Industrial Revolution, the world has seen a remarkable growth in the size and
complexity of organizations. An integral part of this revolutionary change has been a tremendous increase in the
division of labour and segmentation of management responsibilities in these organizations. The results have been
spectacular. However, along with its blessings, this increasing specialization has created new problems and
problems that are still occurring in many organizations. One problem is a tendency for the many components of
an organization to grow into relatively autonomous empires with their own goals and value systems, thereby
losing sight of how their activities and objectives could blend with those of the overall organization. In other
words, it could mean that what is best for one component frequently is detrimental to another, so the components
may end up working at cross purposes. A related problem is that as the complexity and specialization in an
organization increase, it becomes more and more difficult to allocate the available resources to the various
activities in a way that is most effective for the organization as a whole. These kinds of problems and the need to
find a better way to solve them provide the impetus for the use of operational research techniques such as
production planning and control. This technique is robust and flexible to accommodate variations in economic
cycles of economies, while still achieving the objectives of organizations in the long and very long-runs.
The European, American and Asian economies found this technique as indispensable in any operation,
irrespective of size and complexity. This very literature is hardly mentioned in any Nigerian operations and if
mentioned it lacked the sincerity behind the philosophy; or else the results could not have been negative while it
is positive in the other countries. For instance, the nation's yearly budgets and development plans should have
given the economy the necessary lead towards achieving stated targets, given the huge resources the economy
has. Instead the economy battles with sunk costs in trying to bailout organizations.
Equity is invested money that, in contrast to debt capital, is not repaid to the investors in the normal
course of business. It represents the risk capital staked by the owners through purchase of a company's common
stock (ordinary shares).
The value of equity capital is computed by estimating the current market value of everything owned by
the company from which the total of all liabilities is subtracted. On the balance sheet of the company, equity
capital is listed as stockholders' equity or owners' equity. It is also called equity financing or share capital.
The book value of equity will change in the case of changes in the firm's assets relative to its liabilities.
For example, a profitable firm receives more cash for its products than the cost at which it produced these goods,
and so in the act of making a profit, it is increasing its retained earnings, therefore its shareholders' equity
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European Journal of Business and Management

www.iiste.org

ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

(Ezirim, 2005;Weston and Brigham, 2005). This has shown that profitability (productivity) which, according to
Jain and Aggarwal (2008), is the measurement of the economic soundness of the means, can be optimized using
the PIF.
In Jain and Aggarwal (2008), PIF problem requires two major types of decisions. One that relates to the
design of the systems and the other that relates to the operation and control of the system; the relative balance of
the emphasis is on such factors as cost, services, reliability of both functional and time performance which
depend on the basic purpose of the enterprise or institution and the general nature of goods or services being
produced. The problem of this research therefore is to investigate the effect of the application of PIF as a
technique in its entirety on the productivity and hence equity enhancement of manufacturing firms in Nigeria.
Selected manufacturing firms are surveyed to determine and establish empirically the extent and variability of
this application.
It does appear that one of the greatest challenges facing the Nigerian manufacturing sector therefore, is
how it can, like its counterparts in the industrially advanced economies through its PIF turnout quality products
for customers and which can compete favourably, thereby enhancing the productivity and equity potentials in the
Nigerian Manufacturing Industry. It is against this backdrop that, we are compelled to empirically examine the
place of PIF in explaining enhanced equity capital in Nigeria that can assist the economy to achieve positive
results as is the case in advanced economies.
Thinking along the reasoning of Fowge (1997), it is our belief that interest in PIF and enhanced equity
capital has spurred curiosity beyond the capacity of scholars to keep pace with it either theoretically or
methodologically. This seems to us to be the case in Nigeria as we do not find sufficient evidence of empirical
studies on PIF and its impact on equity capital in the Nigerian Manufacturing Industry. Correspondingly
empirical studies on PIF and enhanced equity capital specific-research in Nigeria are scanty (Chinweizu, 1979;
Agbadudu, 1996) although Chase et al (2001) while acknowledging that the models of PIF and enhanced equity
capital have been developed and tested in western countries, advocates that there is a need for more systematic
research to determine whether these models apply elsewhere. It is upon this premise that this study sets out to
examine the impact of PIF on enhanced equity capital (EEC)in the Nigerian Manufacturing Industry with a
view to enhancing organizational effectiveness and competitive advantage.
2.0 Theoretical Foundation.
Two key variables were important to the focus of this study and they were the Criterion Variable – EEC
which depends on the Predictor Variable – PIF. We defined EEC as a measure of productivity. In the same way,
PIF has its dimensions as production planning, scheduling and control. It was assumed that the practices of PIF
will trigger enhanced equity capital through its dimensional effects on productivity.
The objectives and the research questions for the study were drawn from the hypothesized relationships
between the predictor and criterion variables. The framework assumes a straight line relationship between the
predictor variables and the criterion variables. The conceptual framework, which is unidirectional, indicates that
EEC is a function of PIF. This is represented in the following mathematical model:
EEC = ƒ(PIF)
Where:
EEC = Enhanced equity capital
PIF
= Production Improvement Function
From the conceptual framework, EEC is a measure of productivity. The framework also shows the
dimension of PIF as production planning, scheduling and control. Consequently our mathematical model can be
expanded thus:
EEC = ƒ(p, s, c)
Where:
p = planning
s = scheduling
c = control
3.0 Methodology.
The cross sectional survey design is considered most appropriate because what is being investigated is
experiences (Anwuluorah, 1987). Again the range of issues and inter-relations are numerous and diverse. The
study is also a causal study that is intended to identify the effect of the application of PIF on EEC in the
manufacturing industry. The design is expected to reveal the relationship between PIF and EEC. The purpose of
a cross-sectional survey therefore is to generate a body of data in connection with two or more variables, and to
125
European Journal of Business and Management

www.iiste.org

ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

examine and identify patterns of association (Nachimias, and Nachimias, 1981). This design meets our purpose
and enables us to generalize from the result of our sample for the entire population. Furthermore, the causal
investigation is adopted in this study and is built around the purpose of hypothesis testing in which we examined
the causal relationship between PIF and EEC in a non-contrived setting.
3.1 Population of the Study
The population consists of those manufacturing companies quoted in the Nigerian Stock Exchange
(NSE) Factbook of 2009. A total of one hundred (100) manufacturing companies were identified, but a sample
of eighty(80) was drawn for the study using stratified random sampling method. In this case, the proportional
allocation approach was used firstly to determine the number of companies in each stratum (sector) as classified
by the Nigerian Stock Exchange (NSE) Factbook of 2009. Thereafter a simple random sampling technique was
used to select members of the sample frame from each stratum (sector).
3.2 Data Collection Methods
Primary and secondary sources of data collection were explored for this study. The primary data were
gathered through the administration of questionnaire designed using Five-Point Likert-Scale. While the
secondary data were sourced from the companys’ financial statements as reported in the Nigerian Stock
Exchange Factbook of 2009.
The structured questionnaire containing questions relating to PIF with dimensions such as production
planning, scheduling and control as it affects EEC of firms in the Nigerian manufacturing industry were served
on chief executives or senior managers in the production and operations department. The copies of the
questionnaire were administered personally and online (where applicable) by the researcher to the respondents.
Sixty two (62) copies of the questionnaire were retrieved and analyzed.
To generate the qualitative data, we adopted an in-depth personal interview through the use of open
ended questions designed to clarify certain issues and obtain further intricate details about the phenomena under
investigation which were difficult to capture through the structured questionnaire. Sometimes, since the
interviews were conducted after the copies of the questionnaire with their responses have been retrieved, the
interview was also used as a confirmatory test of some of the responses especially those that were not clear.
We observed the operations in the study units. Here, we adopted the socio-technical systems model
(Susman and Evered, 1978). In this respect, the system's framework guided the collection of facts so that they
were organized into an integrated whole about boundaries, transformation of inputs into outputs and the climate
of the operations environment. Secondary data were generated from textbooks, journals, company bulletins,
annual reports of firms and professional bodies. These materials were reviewed to obtain relevant information
about the organisations and the phenomena we have studied.
3.3 Research Hypotheses
In undertaking this study, we were guided by the following hypotheses:
Ho1

There is no significant relationship between production planning and enhanced equity capital
in the Nigerian Manufacturing Industry.

Ho2

There is no significant relationship between production scheduling and enhanced equity capital
in the Nigerian Manufacturing Industry.

Ho3

There is no significant relationship between production control and enhanced equity capital in
the Nigerian Manufacturing Industry.

4.0 Guide to Decision.
This section provides a verification of the hypotheses that were stated earlier using the simple linear
regression analysis.
Production planning has no significant impact on enhanced equity capital in the Nigerian
H01:
manufacturing industry.
In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the
selected companies was regressed with the percentage responses of the influence of plan for production activities
on enhanced equity capital. The result obtained is presented in the table below;

126
European Journal of Business and Management

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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

Table 4.1:

The Impact of Production Planning on Equity Capital
Statement Variables
Co-efficient of correlation
Co-efficient of determination
t-statistic
p-value
Intercept
Partial Regression Co-efficient
Source; SPSS Version 16 Window Output

Values
0.652
0.423
3.175
0.02
123997.494
40466.853

The table shows an R-value of 0.652, which suggests a strong impact of production planning on equity
capital. The analysis shows that changes in production planning accounts for about 42.3% variation in equity
capital, hence the model is of moderate fit. Therefore, the null hypothesis that production planning has no
significant impact on equity capital in the Nigerian manufacturing industry was rejected.
H02:

Production scheduling has no significant influence on enhanced equity capital in Nigerian
manufacturing industry.
In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the
selected companies was regressed with the percentage responses of the influence of schedule for production
activities on cost minimization performance. The result obtained is presented in the table below;
Table 4.2:
The Influence of Production Scheduling on Equity Capital
Statement Variables
Values
Co-efficient of correlation
0.151
Co-efficient of determination
0.023
t-statistic
1.175
p-value
0.245
Intercept
1.851
Partial Regression Co-efficient
.003
Source; SPSS Version 16 Window Output
The table shows an R-value of 0.151, which suggests a weak influence of production scheduling on
equity capital. The analysis shows that changes in production scheduling accounts for about 2.3% variation in
equity capital, hence the model is not a good fit. Therefore, the null hypothesis that production scheduling has no
significant impact on equity capital in Nigerian manufacturing industry, was accepted.
There is no significant relationship between production control and enhanced equity capital in
H03:
the Nigerian manufacturing industry.
In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the
selected companies was regressed with the percentage responses of the influence of production control on equity
capital. The result obtained is presented in the table below;
Table 4.3:

The Relationship between Production Control and Equity Capital
Statement Variables
Values
Co-efficient of correlation
0.701
Co-efficient of determination
0.49
t-statistic
2.777
p-value
0.000
Intercept
6.30036
Partial Regression Co-efficient
40516.012
Source; SPSS Version 16 Window Output
The table shows an R-value of 0.701, which suggests a strong relationship between production control
and equity capital. The analysis shows that changes in production control account for about 49% variation in
equity capital, hence the model is a moderate fit. Therefore, the null hypothesis was rejected.
The following findings were therefore drawn;
1) Plan for production activities enhances equity capital of the firm.
2) Schedule for production activities does not enhance equity capital of the firm.
3) Control of production activities enhances equity capital of the firm.
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European Journal of Business and Management

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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

5.0

Discussion of Findings
The logical question one may ask at this point is “what do the research findings entail”? Therefore, this
section of the study is focused on a detailed discussion of the research findings by relating them one after the
other to previous studies.
5.1
Production Planning and Enhanced Equity Capital.
The key measure of the success of a firm is its productivity performance; hence business executives
work assiduously to actualize this objective. One of the major means of doing this is through enhanced equity
capital.
In this study, we observed that production planning has a fair significant impact on equity capital and
hence profitability of manufacturing companies in Nigeria. An increase in production planning activity is
responsible for about 42.3% increase in equity capital. These findings do not differ significantly from prior
studies such as Olusegun and Adegbuyi (2010); Everette (2006), Higgins (2001) and Weimer (1999). Olusegun
and Adegbuyi in their study revealed that a significant relationship exist between production planning operations
and organizational output. Everette (2006) reported that forecasting future demand of a firm’s product helps to
eliminate any form of disruption to meet expected demand, which consequently enhances profitability and
shareholders worth of the business. Higgins (2001) observed that firms with effective production planning
system outperform those with an adhoc approach to production operations in around performance measures.
Weimer (1999) revealed that equity capital is significantly low when there is lack of production planning
operations which may result from wastages, error in product design and rework. This implies that productivity as
well as equity capital is enhanced with adequate production planning operations.
5.2
Production Scheduling and Enhanced Equity Capital.
Production scheduling serves to boost production planning and control. It brings about smooth flow of
work throughout the production cycle, prevents conflicts and delays in the use of productive resources and
determines the expected time for the arrival of supplies and the shipping of finished products at minimum costs.
In this research work, it was gathered that production scheduling has a low influence on equity capital
of Nigerian manufacturing firms. Increasing the scheduling of production activity results in 2.3% increases in
equity capital. The absence of a significant influence of production scheduling, could be attributed to lack of
adequate attention given to production scheduling by production managers. Scheduling is not an end in itself but
a means to an end. It boosts production planning and control for improved performance.
Our findings in this study offer support to Olarenwaju (2010) and Poterba (2006). Olarenwaju (2010)
affirms that in order to enhance productivity in Nigerian public service, adequate attention must be given to
proper work scheduling by public administrators. This is equally applicable to private sector organizations. More
so, Poterba (2006), had asserted that the end result of undermining work schedule in business organization is
inefficient operations, low sales revenue and lack of business growth.
5.3
Production Control and Enhanced Equity Capital.
With production control, a firm can meet customer requests for delivery times when feasible, meet the
present goals for inventory levels, and minimize per unit cost of production. We observed in this study that
production control is a veritable weapon for improved productivity performance in Nigerian manufacturing
firms. It was gathered that an increase in controlling production operations leads to 49% increase in equity
capital. A detailed analysis of these findings revealed that even in most organizations where there are no formal
planning, efforts are always made in controlling operations by ensuring that actual output conforms to expected
output.
The outcome of this study aligns with previous studies. Ikan (2003) reported that production control
aids managers in responding to the resulting threats and opportunities. It detects changes that affect the
organization’s products and services, thereby promoting corporate growth. Matsushita (2001), indicated that
customers’ demand for improved design, quality or delivering time from shareholders and management wealth
maximization are mere illusions without effective production control. Abrahamson and Pickle (1990), reported
that value-added to a product or service so that customers will favour the firm's products as against competitors
offer takes the form of above-average quality, which is usually achieved through control procedures.
6.0
1)

2)

Recommendations
Based on the findings of study, the following recommendations were suggested;
Since production improvement function enhances equity capital and hence from productivity
performance, Nigerian manufacturing firms must with seriousness be involved in effective and formal
planning and control of production activity, irrespective of the size and age of the firm.
Nigerian manufacturing firms should embrace the application of advanced manufacturing technology,
such as automated production technology, computer assisted design and manufacturing (CAD/CAM),
robotics and flexible, manufacturing systems.
128
European Journal of Business and Management

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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

3)

4)

5)

To ensure effective application of advanced manufacturing technology in the Nigerian manufacturing
industry, professionals with high technical knowhow should be hired by the organization and
effective training programmes should be organized for the organizational members who are to be
affected by the technological advancement.
It is evident from our findings that production scheduling, which is a component part of production
improvement function is generally de-emphasized in most of the companies studied and therefore
hinders the smooth flow of work throughout the production cycle which accounts for its insignificant
influence in enhancing equity capital. It is therefore recommended that adequate attention should be
given to production scheduling by production managers.
There should be a formal relationship between the Nigerian manufacturing sector and the tertiary
institutions. This will go a long way to make research activities and findings efficient and effective.

REFERENCES:
Abrahamson, F.A. and Pickle, G. (1990) “The Interface of Production and Marketing – An Empirical Analysis”;
Journal of Industrial Marketing; 7 (1): 212-236.
Anwuluorah, M. C. (1987): “Surveys and when is a survey best in Social Research and Information Gathering”
in Ugwuegbu, D.C.E. and Onwumere, S. O. (ed) Social Research and Information Gathering, (Lagos, F.
G. Printers) p.17 - 27.
Brayton, G.N. (1983). "Simplified Method of Measuring Productivity Identifies Opportunities for Increasing It".
Industrial Engineering. February
Chase, R. B; Aquilano, J.J; and Jacobs l. R. (2001) Operations Management for Competitive Advantage, Boston:
McGraw-Hill.
Chinweizu, C (1979) The West and The Rest of US, London: NOK Publishers
Craig, C.; Harris, R. (1973). "Total Productivity Measurement at the Firm Level". Sloan Management Review
(Spring 1973): 13–28.
Davis, H.S. (2005). Productivity Accounting. University of Pennsylvania.
Eleanya, L. U. M. (2009) De-Industrialization and the Stability of Nation States, Port Harcourt: RIVCAS
Everette, E.A. (2006) Production and Operations Management – A New Approach; Englewood Cliffs; PrenticeHall Inc.
Ezirim, C. B. (2005) Finance Dynamics, principles, techniques and applications, 3rd Edn, Markowitz, Port
Harcourt.
Fowge, F. P. (1997) Modernization without Development in Africa, Africa World Press INC. Asmara, Eritrea.
Graves, Stephen C. (1999) Manufacturing Planning and Control, Massachusetts Institute of Technology,
(November), pp. 17 – 25
Higgins, J.M. (2001) Strategic Management and Operations; Chicago; The Diyden

Press.

Ikan, N. (2003) “Impact of Production Control on Corporate Growth”; Decision Science; 27 (4); 616-639.
Jain K. C.; and L, N. Aggarwal (2008) Production Planning, Control and Industrial Management, Delhi, NaiSarak: Khalma Publishers.
Jaja, S.A. (2005)Small Business Paradigm; Port Harcourt, Pearl Publishers.
Johnson L. A. and Montgomery, D. C. (2009) Operations Research in Production Planning, Scheduling and
Inventory Control, New York: John Wiley.
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European Journal of Business and Management

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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.23, 2013

Jorgenson, D.V.; Griliches, Z. (1967). "The Explanation of Productivity Change". Review of Economic Studies
34 (99): 249–283. doi:10.2307/2296675. JSTOR 2296675.
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National Industry Productivity Board.
Kendrick, J.W. (2004). Improving Company Productivity. The Johns Hopkins University Press.
Matsushita, K. (2001) “Production Control and Customers’ Satisfaction in Industrial Market”; Princeton
University Journal of Management; 9 (1): 107-123.
Mundel, M.E. (1983). Improving Productivity and Effectiveness. Prentice-Hall, Inc.
Nachimias, C. and Nachimias, D. (1981); Research Methods in the Social Sciences, Alternative Second Edition
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Nachimias, D. and Nachimias C. (1976): Research Methodology in the Social Science. UK’Edward Arnold.
Olarenwaju, A.D. (2010) “Productivity Improvement Techniques in the Public Service”; International Journal of
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Olusegun, D. and Adegbuyi, F.M. (2010) “The Effect of Production Planning and
Budgeting on Organizational Productivity”; in Olusegun, D and Adegbuyi, F.M. (Ed.)
Production
Management – A Strategic Approach; Ibadan; Heinemann Publishers
Pineda, A. (2009). A Multiple Case Study Research to Determine and respond to Management Information Need
Using Total-Factor Productivity Measurement (TFPM). Virginia Polytechnic Institute and State
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Poterba, D. (2006) “Work Schedule and Business Growth in India Manufacturing Firms”; Administrative
Science Quarterly; 21(2): 247-261.
Susman G.I; and R. Evered R. (1978); “The Scientific Merits of Action Research”. Administrative Science
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Umoh G. I. (2005) Quantitative Analysis for Modeling and Decision Making, Nigeria: Lynno Company.
Weimer, A.M. (1999) Introduction to Business – A Management Approach; Homewood Illinois; Richard D.
Irwin.
Weston, J. F. and Brigham, E. F.(2005) Essentials of Managerial Finance 4th Edn, The Dryden Press,Hinsdale
Illinois.
Godwin Ikpe Umoh is an Associate Professor in the University of Port Harcourt. He has a PhD Engineering
Production, Specializing in Systems, Re-Engineering and Operational Research from the University of
Birmingham, England, UK (1983). His MSC is in Systems Analysis and Operational Research (1981). He has a
Graduate Diploma in Systems analysis and design, from Aberdeen College, Aberdeen, Scotland, U.K. (1980).
He is presently the Head of Department of Management in the Faculty of Management Sciences in the
University of Port Harcourt. He is a member of the Institute of Data Processing London. His areas of
Specialization include Operational research applications in business, Advanced Statistics and Statistical analysis,
Operations/Production Management, Human factors engineering otherwise known as Ergonomics, Management
Information Systems. He is a Fellow, Nigerian Institute of Corporate Administration. He is a Member,
Operational Research Society, UK, Member, Institute of Data Processing, London, Member, Ergonomics
Society, UK, Member, Institute of Production Engineers, Uk. Member, The Academy of Management.
Ify Harcourt Wokocha is a Chief Lecturer with the Rivers State College of Arts and Science. He has a PhD in
Management from the University of Port Harcourt. His area of specialization includes Operations Management.
He is a member of the Nigeria Institute of Management.
130
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Production improvement function and equity capital of firms in the nigerian manufacturing industry

  • 1. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 Production Improvement Function and Equity Capital of Firms in the Nigerian Manufacturing Industry 1 *G.I. Umoh, 2Ify Harcourt Wokocha, Management Department, Faculty of Management Sciences, University of Port Harcourt, Port Harcourt. Nigeria. 2 Office Technology and Management, School of Management Sciences, Rivers State College of Arts and Sciences, Rumuola Port Harcourt * godaks5@yahoo.co.uk 1, Abstract This paper investigates the extent to which Production Improvement Function, had affected the Equity Capital of firms in the Nigerian manufacturing industry. Three hypotheses were formulated and copies of questionnaire were distributed to eighty respondents in the eighty sampled manufacturing firms from the one hundred in the industry, that are quoted in the Stock Exchange(Fact Book 2009). Sixty two copies of the questionnaire were retrieved. These with the financial statements of the firms were used for the analysis. From its findings, the study revealed that production planning and control have significant impacts in enhancing the equity capital of firms in Nigerian manufacturing industry; while production scheduling has an insignificant influence on equity capital alone. This finding implies that production improvement function significantly affects the equity capital of firms and therefore provides evidence for the claims of Olusegun and Adegbuyi(2010); Olarenwaju(2010); Poterba(2006); and Ikan(2003). Based on these, the study recommends among others, that the Nigerian manufacturing industry should efficiently and effectively operationalize the all embracing production improvement function, especially in the area of production scheduling, in order to restore the industry as the base of all investment and hence development. Keywords: Production Improvement Function, Enhanced Equity Capital, production scheduling. 1.0 Introduction Since the advent of the Industrial Revolution, the world has seen a remarkable growth in the size and complexity of organizations. An integral part of this revolutionary change has been a tremendous increase in the division of labour and segmentation of management responsibilities in these organizations. The results have been spectacular. However, along with its blessings, this increasing specialization has created new problems and problems that are still occurring in many organizations. One problem is a tendency for the many components of an organization to grow into relatively autonomous empires with their own goals and value systems, thereby losing sight of how their activities and objectives could blend with those of the overall organization. In other words, it could mean that what is best for one component frequently is detrimental to another, so the components may end up working at cross purposes. A related problem is that as the complexity and specialization in an organization increase, it becomes more and more difficult to allocate the available resources to the various activities in a way that is most effective for the organization as a whole. These kinds of problems and the need to find a better way to solve them provide the impetus for the use of operational research techniques such as production planning and control. This technique is robust and flexible to accommodate variations in economic cycles of economies, while still achieving the objectives of organizations in the long and very long-runs. The European, American and Asian economies found this technique as indispensable in any operation, irrespective of size and complexity. This very literature is hardly mentioned in any Nigerian operations and if mentioned it lacked the sincerity behind the philosophy; or else the results could not have been negative while it is positive in the other countries. For instance, the nation's yearly budgets and development plans should have given the economy the necessary lead towards achieving stated targets, given the huge resources the economy has. Instead the economy battles with sunk costs in trying to bailout organizations. Equity is invested money that, in contrast to debt capital, is not repaid to the investors in the normal course of business. It represents the risk capital staked by the owners through purchase of a company's common stock (ordinary shares). The value of equity capital is computed by estimating the current market value of everything owned by the company from which the total of all liabilities is subtracted. On the balance sheet of the company, equity capital is listed as stockholders' equity or owners' equity. It is also called equity financing or share capital. The book value of equity will change in the case of changes in the firm's assets relative to its liabilities. For example, a profitable firm receives more cash for its products than the cost at which it produced these goods, and so in the act of making a profit, it is increasing its retained earnings, therefore its shareholders' equity 124
  • 2. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 (Ezirim, 2005;Weston and Brigham, 2005). This has shown that profitability (productivity) which, according to Jain and Aggarwal (2008), is the measurement of the economic soundness of the means, can be optimized using the PIF. In Jain and Aggarwal (2008), PIF problem requires two major types of decisions. One that relates to the design of the systems and the other that relates to the operation and control of the system; the relative balance of the emphasis is on such factors as cost, services, reliability of both functional and time performance which depend on the basic purpose of the enterprise or institution and the general nature of goods or services being produced. The problem of this research therefore is to investigate the effect of the application of PIF as a technique in its entirety on the productivity and hence equity enhancement of manufacturing firms in Nigeria. Selected manufacturing firms are surveyed to determine and establish empirically the extent and variability of this application. It does appear that one of the greatest challenges facing the Nigerian manufacturing sector therefore, is how it can, like its counterparts in the industrially advanced economies through its PIF turnout quality products for customers and which can compete favourably, thereby enhancing the productivity and equity potentials in the Nigerian Manufacturing Industry. It is against this backdrop that, we are compelled to empirically examine the place of PIF in explaining enhanced equity capital in Nigeria that can assist the economy to achieve positive results as is the case in advanced economies. Thinking along the reasoning of Fowge (1997), it is our belief that interest in PIF and enhanced equity capital has spurred curiosity beyond the capacity of scholars to keep pace with it either theoretically or methodologically. This seems to us to be the case in Nigeria as we do not find sufficient evidence of empirical studies on PIF and its impact on equity capital in the Nigerian Manufacturing Industry. Correspondingly empirical studies on PIF and enhanced equity capital specific-research in Nigeria are scanty (Chinweizu, 1979; Agbadudu, 1996) although Chase et al (2001) while acknowledging that the models of PIF and enhanced equity capital have been developed and tested in western countries, advocates that there is a need for more systematic research to determine whether these models apply elsewhere. It is upon this premise that this study sets out to examine the impact of PIF on enhanced equity capital (EEC)in the Nigerian Manufacturing Industry with a view to enhancing organizational effectiveness and competitive advantage. 2.0 Theoretical Foundation. Two key variables were important to the focus of this study and they were the Criterion Variable – EEC which depends on the Predictor Variable – PIF. We defined EEC as a measure of productivity. In the same way, PIF has its dimensions as production planning, scheduling and control. It was assumed that the practices of PIF will trigger enhanced equity capital through its dimensional effects on productivity. The objectives and the research questions for the study were drawn from the hypothesized relationships between the predictor and criterion variables. The framework assumes a straight line relationship between the predictor variables and the criterion variables. The conceptual framework, which is unidirectional, indicates that EEC is a function of PIF. This is represented in the following mathematical model: EEC = ƒ(PIF) Where: EEC = Enhanced equity capital PIF = Production Improvement Function From the conceptual framework, EEC is a measure of productivity. The framework also shows the dimension of PIF as production planning, scheduling and control. Consequently our mathematical model can be expanded thus: EEC = ƒ(p, s, c) Where: p = planning s = scheduling c = control 3.0 Methodology. The cross sectional survey design is considered most appropriate because what is being investigated is experiences (Anwuluorah, 1987). Again the range of issues and inter-relations are numerous and diverse. The study is also a causal study that is intended to identify the effect of the application of PIF on EEC in the manufacturing industry. The design is expected to reveal the relationship between PIF and EEC. The purpose of a cross-sectional survey therefore is to generate a body of data in connection with two or more variables, and to 125
  • 3. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 examine and identify patterns of association (Nachimias, and Nachimias, 1981). This design meets our purpose and enables us to generalize from the result of our sample for the entire population. Furthermore, the causal investigation is adopted in this study and is built around the purpose of hypothesis testing in which we examined the causal relationship between PIF and EEC in a non-contrived setting. 3.1 Population of the Study The population consists of those manufacturing companies quoted in the Nigerian Stock Exchange (NSE) Factbook of 2009. A total of one hundred (100) manufacturing companies were identified, but a sample of eighty(80) was drawn for the study using stratified random sampling method. In this case, the proportional allocation approach was used firstly to determine the number of companies in each stratum (sector) as classified by the Nigerian Stock Exchange (NSE) Factbook of 2009. Thereafter a simple random sampling technique was used to select members of the sample frame from each stratum (sector). 3.2 Data Collection Methods Primary and secondary sources of data collection were explored for this study. The primary data were gathered through the administration of questionnaire designed using Five-Point Likert-Scale. While the secondary data were sourced from the companys’ financial statements as reported in the Nigerian Stock Exchange Factbook of 2009. The structured questionnaire containing questions relating to PIF with dimensions such as production planning, scheduling and control as it affects EEC of firms in the Nigerian manufacturing industry were served on chief executives or senior managers in the production and operations department. The copies of the questionnaire were administered personally and online (where applicable) by the researcher to the respondents. Sixty two (62) copies of the questionnaire were retrieved and analyzed. To generate the qualitative data, we adopted an in-depth personal interview through the use of open ended questions designed to clarify certain issues and obtain further intricate details about the phenomena under investigation which were difficult to capture through the structured questionnaire. Sometimes, since the interviews were conducted after the copies of the questionnaire with their responses have been retrieved, the interview was also used as a confirmatory test of some of the responses especially those that were not clear. We observed the operations in the study units. Here, we adopted the socio-technical systems model (Susman and Evered, 1978). In this respect, the system's framework guided the collection of facts so that they were organized into an integrated whole about boundaries, transformation of inputs into outputs and the climate of the operations environment. Secondary data were generated from textbooks, journals, company bulletins, annual reports of firms and professional bodies. These materials were reviewed to obtain relevant information about the organisations and the phenomena we have studied. 3.3 Research Hypotheses In undertaking this study, we were guided by the following hypotheses: Ho1 There is no significant relationship between production planning and enhanced equity capital in the Nigerian Manufacturing Industry. Ho2 There is no significant relationship between production scheduling and enhanced equity capital in the Nigerian Manufacturing Industry. Ho3 There is no significant relationship between production control and enhanced equity capital in the Nigerian Manufacturing Industry. 4.0 Guide to Decision. This section provides a verification of the hypotheses that were stated earlier using the simple linear regression analysis. Production planning has no significant impact on enhanced equity capital in the Nigerian H01: manufacturing industry. In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the selected companies was regressed with the percentage responses of the influence of plan for production activities on enhanced equity capital. The result obtained is presented in the table below; 126
  • 4. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 Table 4.1: The Impact of Production Planning on Equity Capital Statement Variables Co-efficient of correlation Co-efficient of determination t-statistic p-value Intercept Partial Regression Co-efficient Source; SPSS Version 16 Window Output Values 0.652 0.423 3.175 0.02 123997.494 40466.853 The table shows an R-value of 0.652, which suggests a strong impact of production planning on equity capital. The analysis shows that changes in production planning accounts for about 42.3% variation in equity capital, hence the model is of moderate fit. Therefore, the null hypothesis that production planning has no significant impact on equity capital in the Nigerian manufacturing industry was rejected. H02: Production scheduling has no significant influence on enhanced equity capital in Nigerian manufacturing industry. In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the selected companies was regressed with the percentage responses of the influence of schedule for production activities on cost minimization performance. The result obtained is presented in the table below; Table 4.2: The Influence of Production Scheduling on Equity Capital Statement Variables Values Co-efficient of correlation 0.151 Co-efficient of determination 0.023 t-statistic 1.175 p-value 0.245 Intercept 1.851 Partial Regression Co-efficient .003 Source; SPSS Version 16 Window Output The table shows an R-value of 0.151, which suggests a weak influence of production scheduling on equity capital. The analysis shows that changes in production scheduling accounts for about 2.3% variation in equity capital, hence the model is not a good fit. Therefore, the null hypothesis that production scheduling has no significant impact on equity capital in Nigerian manufacturing industry, was accepted. There is no significant relationship between production control and enhanced equity capital in H03: the Nigerian manufacturing industry. In testing this hypothesis, enhanced equity capital as the variable measure for productivity of the selected companies was regressed with the percentage responses of the influence of production control on equity capital. The result obtained is presented in the table below; Table 4.3: The Relationship between Production Control and Equity Capital Statement Variables Values Co-efficient of correlation 0.701 Co-efficient of determination 0.49 t-statistic 2.777 p-value 0.000 Intercept 6.30036 Partial Regression Co-efficient 40516.012 Source; SPSS Version 16 Window Output The table shows an R-value of 0.701, which suggests a strong relationship between production control and equity capital. The analysis shows that changes in production control account for about 49% variation in equity capital, hence the model is a moderate fit. Therefore, the null hypothesis was rejected. The following findings were therefore drawn; 1) Plan for production activities enhances equity capital of the firm. 2) Schedule for production activities does not enhance equity capital of the firm. 3) Control of production activities enhances equity capital of the firm. 127
  • 5. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 5.0 Discussion of Findings The logical question one may ask at this point is “what do the research findings entail”? Therefore, this section of the study is focused on a detailed discussion of the research findings by relating them one after the other to previous studies. 5.1 Production Planning and Enhanced Equity Capital. The key measure of the success of a firm is its productivity performance; hence business executives work assiduously to actualize this objective. One of the major means of doing this is through enhanced equity capital. In this study, we observed that production planning has a fair significant impact on equity capital and hence profitability of manufacturing companies in Nigeria. An increase in production planning activity is responsible for about 42.3% increase in equity capital. These findings do not differ significantly from prior studies such as Olusegun and Adegbuyi (2010); Everette (2006), Higgins (2001) and Weimer (1999). Olusegun and Adegbuyi in their study revealed that a significant relationship exist between production planning operations and organizational output. Everette (2006) reported that forecasting future demand of a firm’s product helps to eliminate any form of disruption to meet expected demand, which consequently enhances profitability and shareholders worth of the business. Higgins (2001) observed that firms with effective production planning system outperform those with an adhoc approach to production operations in around performance measures. Weimer (1999) revealed that equity capital is significantly low when there is lack of production planning operations which may result from wastages, error in product design and rework. This implies that productivity as well as equity capital is enhanced with adequate production planning operations. 5.2 Production Scheduling and Enhanced Equity Capital. Production scheduling serves to boost production planning and control. It brings about smooth flow of work throughout the production cycle, prevents conflicts and delays in the use of productive resources and determines the expected time for the arrival of supplies and the shipping of finished products at minimum costs. In this research work, it was gathered that production scheduling has a low influence on equity capital of Nigerian manufacturing firms. Increasing the scheduling of production activity results in 2.3% increases in equity capital. The absence of a significant influence of production scheduling, could be attributed to lack of adequate attention given to production scheduling by production managers. Scheduling is not an end in itself but a means to an end. It boosts production planning and control for improved performance. Our findings in this study offer support to Olarenwaju (2010) and Poterba (2006). Olarenwaju (2010) affirms that in order to enhance productivity in Nigerian public service, adequate attention must be given to proper work scheduling by public administrators. This is equally applicable to private sector organizations. More so, Poterba (2006), had asserted that the end result of undermining work schedule in business organization is inefficient operations, low sales revenue and lack of business growth. 5.3 Production Control and Enhanced Equity Capital. With production control, a firm can meet customer requests for delivery times when feasible, meet the present goals for inventory levels, and minimize per unit cost of production. We observed in this study that production control is a veritable weapon for improved productivity performance in Nigerian manufacturing firms. It was gathered that an increase in controlling production operations leads to 49% increase in equity capital. A detailed analysis of these findings revealed that even in most organizations where there are no formal planning, efforts are always made in controlling operations by ensuring that actual output conforms to expected output. The outcome of this study aligns with previous studies. Ikan (2003) reported that production control aids managers in responding to the resulting threats and opportunities. It detects changes that affect the organization’s products and services, thereby promoting corporate growth. Matsushita (2001), indicated that customers’ demand for improved design, quality or delivering time from shareholders and management wealth maximization are mere illusions without effective production control. Abrahamson and Pickle (1990), reported that value-added to a product or service so that customers will favour the firm's products as against competitors offer takes the form of above-average quality, which is usually achieved through control procedures. 6.0 1) 2) Recommendations Based on the findings of study, the following recommendations were suggested; Since production improvement function enhances equity capital and hence from productivity performance, Nigerian manufacturing firms must with seriousness be involved in effective and formal planning and control of production activity, irrespective of the size and age of the firm. Nigerian manufacturing firms should embrace the application of advanced manufacturing technology, such as automated production technology, computer assisted design and manufacturing (CAD/CAM), robotics and flexible, manufacturing systems. 128
  • 6. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 3) 4) 5) To ensure effective application of advanced manufacturing technology in the Nigerian manufacturing industry, professionals with high technical knowhow should be hired by the organization and effective training programmes should be organized for the organizational members who are to be affected by the technological advancement. It is evident from our findings that production scheduling, which is a component part of production improvement function is generally de-emphasized in most of the companies studied and therefore hinders the smooth flow of work throughout the production cycle which accounts for its insignificant influence in enhancing equity capital. It is therefore recommended that adequate attention should be given to production scheduling by production managers. There should be a formal relationship between the Nigerian manufacturing sector and the tertiary institutions. This will go a long way to make research activities and findings efficient and effective. REFERENCES: Abrahamson, F.A. and Pickle, G. (1990) “The Interface of Production and Marketing – An Empirical Analysis”; Journal of Industrial Marketing; 7 (1): 212-236. Anwuluorah, M. C. (1987): “Surveys and when is a survey best in Social Research and Information Gathering” in Ugwuegbu, D.C.E. and Onwumere, S. O. (ed) Social Research and Information Gathering, (Lagos, F. G. Printers) p.17 - 27. Brayton, G.N. (1983). "Simplified Method of Measuring Productivity Identifies Opportunities for Increasing It". Industrial Engineering. February Chase, R. B; Aquilano, J.J; and Jacobs l. R. (2001) Operations Management for Competitive Advantage, Boston: McGraw-Hill. Chinweizu, C (1979) The West and The Rest of US, London: NOK Publishers Craig, C.; Harris, R. (1973). "Total Productivity Measurement at the Firm Level". Sloan Management Review (Spring 1973): 13–28. Davis, H.S. (2005). Productivity Accounting. University of Pennsylvania. Eleanya, L. U. M. (2009) De-Industrialization and the Stability of Nation States, Port Harcourt: RIVCAS Everette, E.A. (2006) Production and Operations Management – A New Approach; Englewood Cliffs; PrenticeHall Inc. Ezirim, C. B. (2005) Finance Dynamics, principles, techniques and applications, 3rd Edn, Markowitz, Port Harcourt. Fowge, F. P. (1997) Modernization without Development in Africa, Africa World Press INC. Asmara, Eritrea. Graves, Stephen C. (1999) Manufacturing Planning and Control, Massachusetts Institute of Technology, (November), pp. 17 – 25 Higgins, J.M. (2001) Strategic Management and Operations; Chicago; The Diyden Press. Ikan, N. (2003) “Impact of Production Control on Corporate Growth”; Decision Science; 27 (4); 616-639. Jain K. C.; and L, N. Aggarwal (2008) Production Planning, Control and Industrial Management, Delhi, NaiSarak: Khalma Publishers. Jaja, S.A. (2005)Small Business Paradigm; Port Harcourt, Pearl Publishers. Johnson L. A. and Montgomery, D. C. (2009) Operations Research in Production Planning, Scheduling and Inventory Control, New York: John Wiley. 129
  • 7. European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.23, 2013 Jorgenson, D.V.; Griliches, Z. (1967). "The Explanation of Productivity Change". Review of Economic Studies 34 (99): 249–283. doi:10.2307/2296675. JSTOR 2296675. Kendrick, J.; Creamer, D. (2005). Measuring Company Productivity: A handbook with Case Studies (89). The National Industry Productivity Board. Kendrick, J.W. (2004). Improving Company Productivity. The Johns Hopkins University Press. Matsushita, K. (2001) “Production Control and Customers’ Satisfaction in Industrial Market”; Princeton University Journal of Management; 9 (1): 107-123. Mundel, M.E. (1983). Improving Productivity and Effectiveness. Prentice-Hall, Inc. Nachimias, C. and Nachimias, D. (1981); Research Methods in the Social Sciences, Alternative Second Edition without Statistics. Edward Anold (Publishers) Ltd. London. Nachimias, D. and Nachimias C. (1976): Research Methodology in the Social Science. UK’Edward Arnold. Olarenwaju, A.D. (2010) “Productivity Improvement Techniques in the Public Service”; International Journal of Management and Administration; 31(1): 144-159 Olusegun, D. and Adegbuyi, F.M. (2010) “The Effect of Production Planning and Budgeting on Organizational Productivity”; in Olusegun, D and Adegbuyi, F.M. (Ed.) Production Management – A Strategic Approach; Ibadan; Heinemann Publishers Pineda, A. (2009). A Multiple Case Study Research to Determine and respond to Management Information Need Using Total-Factor Productivity Measurement (TFPM). Virginia Polytechnic Institute and State University Poterba, D. (2006) “Work Schedule and Business Growth in India Manufacturing Firms”; Administrative Science Quarterly; 21(2): 247-261. Susman G.I; and R. Evered R. (1978); “The Scientific Merits of Action Research”. Administrative Science Quarterly. Vol. 123 p 599. Umoh G. I. (2005) Quantitative Analysis for Modeling and Decision Making, Nigeria: Lynno Company. Weimer, A.M. (1999) Introduction to Business – A Management Approach; Homewood Illinois; Richard D. Irwin. Weston, J. F. and Brigham, E. F.(2005) Essentials of Managerial Finance 4th Edn, The Dryden Press,Hinsdale Illinois. Godwin Ikpe Umoh is an Associate Professor in the University of Port Harcourt. He has a PhD Engineering Production, Specializing in Systems, Re-Engineering and Operational Research from the University of Birmingham, England, UK (1983). His MSC is in Systems Analysis and Operational Research (1981). He has a Graduate Diploma in Systems analysis and design, from Aberdeen College, Aberdeen, Scotland, U.K. (1980). He is presently the Head of Department of Management in the Faculty of Management Sciences in the University of Port Harcourt. He is a member of the Institute of Data Processing London. His areas of Specialization include Operational research applications in business, Advanced Statistics and Statistical analysis, Operations/Production Management, Human factors engineering otherwise known as Ergonomics, Management Information Systems. He is a Fellow, Nigerian Institute of Corporate Administration. He is a Member, Operational Research Society, UK, Member, Institute of Data Processing, London, Member, Ergonomics Society, UK, Member, Institute of Production Engineers, Uk. Member, The Academy of Management. Ify Harcourt Wokocha is a Chief Lecturer with the Rivers State College of Arts and Science. He has a PhD in Management from the University of Port Harcourt. His area of specialization includes Operations Management. He is a member of the Nigeria Institute of Management. 130
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