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Essays on regulatory environment and firm performance in Sub-Sahara Africa

Tannor, WA

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WA Tannor



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Abstract

This three-essay thesis examines how national institutions influence firm performance and activities in sub-Saharan African economies. Most developing countries generally consider businesses as the key to economic development. Unfortunately, national institutions are weak in sub-Sahara Africa and hence not conducive, which has hindered firm performance. The study utilises the World Bank Enterprise Surveys data for firm-level performance and the IMF Monitoring of Funds Arrangements data for structural reform indexes. Additionally, data from the World Development Indicators and World Governance Indicators capture inflation, Gross Domestic Product growth rates, and regulatory quality, respectively. The main finding is that firm performance depends on regulatory quality in sub-Sahara Africa.
In chapter 2, the first essay examines export orientation and the determinants of internationalisation of sub-Saharan African firms. In the past two decades, there has been an internationalisation drive by SSA countries in areas including product diversification and acquisition of quality management systems certification. The literature on internationalisation is mainly limited to developed and emerging economies. However, this study views internationalisation from the SSA perspective. The dataset used is from the World Bank Enterprise Surveys. The dataset considered 31795 enterprises from 39 sub-Saharan African countries between 2006 and 2018. The investigation was accomplished by applying export orientation as the dependent variable against other determinants. This quantitative research adopted a multiple set of ratio regressions approach and finally settled for the Tobit regression for the analysis. This essay’s main finding indicates that export orientation, depending on the firm characteristics, enhances the internationalisation of firms in sub-Saharan Africa. Business registration and firm size significantly and positively impact export orientation. This knowledge about the determinants of internationalisation contributes to expanding the literature on firm growth globally, specifically in sub-Sahara Africa.
In chapter three, the second essay examines the impact of selected structural reforms on firm performance considering 31795 firms in 39 sub-Sahara African countries from 2006 to 2018. Enhancing firm performance in a global market is significant for developing economies, which is why structural reforms are needed. The much-publicized result that structural reforms are associated with economic growth is evidenced only in middle-income economies. Data from the WBES, IMF- MONA and WDI are used to achieve the aim of this study. Exploring diverse options, this study uses a multilevel mixed method to assess the impact of structural reforms on firm performance. In line with previous studies, the findings are that successful structural reforms significantly enhance firm performance, and further trade reforms are the key drivers of firm performance in SSA. Remarkably, corruption is statistically significant and positive, and trade reforms impact firm performance the most. After a decomposed regression, it is concluded that sectoral reforms complement each other for structural reforms to be successful.
In chapter four, the nexus between access to finance and firm performance in developing and emerging economies has recently become topical. This study evaluates the relationship between firm performance, regulatory quality, quality management certification and access to finance. Previous research has demonstrated the relationship between access to finance and firm growth or firm performance, thus neglecting the relationship between regulatory quality, quality management certification and access to finance. Data from the World Bank Enterprise Survey (WBES) and World Governance Indicators (WGI) between 2006 and 2018 are used in this research. The analysis was done using the ordered logit technique, which fits the categorical dependent variable. The findings of this study provide essential indications to the literature on access to finance in sub-Saharan Africa. First, the results indicate that adequate finance encourages firm performance. This is evidenced by estimations that show a positive sign and statistically significant effect of access to finance and firm performance. Secondly, the findings indicate that more robust country-level regulatory quality eases access to external finance as the estimations show a positive and statistically significant effect of access to finance and regulatory quality. Thirdly, quality management certification is positive and significantly influences access to finance in SSA.

Citation

Tannor, W. (2022). Essays on regulatory environment and firm performance in Sub-Sahara Africa. (Thesis). University of Salford

Thesis Type Thesis
Deposit Date Apr 12, 2023
Publicly Available Date Mar 29, 2024
Award Date Oct 27, 2022

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