Abstract
Corporate diversification is a center of research in strategic management and finance. Many firms are experiencing a decline in their traditional activities' dues to environmental challenges, including competition, inadequate infrastructural facilities, and economic instability. The study examines the effect of income diversification on the financial performance of quoted manufacturing firms in Nigeria. Specifically, it determines the impact of product income segment diversification and non-product income segment diversification on quoted manufacturing firms' financial performance in Nigerian. The study adopted an ex-post facto research design using secondary data of 42 firms from the 63 quoted manufacturing firms in Nigeria for 11 years (2007-2017) period. Structural equation modeling (SEM) is utilized for data analysis. The study found that both product income segment diversification and non-product income segment diversification significantly affect the financial performance (ROA and ROCE variables) of quoted manufacturing firms in Nigeria. The study concluded that quoted manufacturing firms' financial performance in Nigeria is significantly affected by product income segment diversification and non-product income diversification. The study recommended that manufacturing firms should strategically diversified to increase their income generation in both the product segment and non-product segment to improve their financial performance.
Highlights
Today's business environment is characterized by uncertainty, dynamism, volatility, and hypercompetition, forcing firms, including manufacturing firms, to stumble on new ways of furthering their growth and development drives
The implication is that Nigerian quoted manufacturing firms have experienced various levels of financial performance during the period
The standard deviations of 0.89 (ROA), 1.20 (ROE), and 1.73 (ROCE) shows that there is no significant variation from the standard average among sampled quoted manufacturing firms
Summary
Today's business environment is characterized by uncertainty, dynamism, volatility, and hypercompetition, forcing firms, including manufacturing firms, to stumble on new ways of furthering their growth and development drives. The current economic situation presents a challenging business atmosphere for corporate firms operating in Nigeria. Though the nation is the largest market hub of Africa, decades in physical infrastructures, especially roads and electricity, corruption, and bureaucratic bottleneck affect firms' growth rate. The country's primary revenue drive (crude oil) is experiencing backwardness, making many critical sectors, including the manufacturing sector to be devastated and reducing revenue generation. Many firms are strategically expanding beyond their traditional operational activities to overcome this awful situation.
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