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Research Article

Producers’ make or buy decision and business shutdown: An evaluation of choice in textile industry

, , , & | (Reviewing editor)
Article: 1632568 | Received 17 Jan 2019, Accepted 10 Jun 2019, Published online: 28 Jun 2019
 

Abstract

The problem of textile industry started with the economic recession of the 1980s and was aggravated by globalization coupled with poor infrastructure and Nigerians perception of made in Nigeria goods. This helped the foreign multi-national textile manufacturing giants to dominate Nigeria textile market leading to the collapse of many viable local textile mills with chains of effects such as expanded unemployment level, increased poverty rates with its associated social vices, reduction in government tax revenue and loss of investors’ funds in Nigeria. This study evaluated the producers’ make or buy decision and organizational shutdown in the textile industry as a means of resolving the issues. Descriptive survey research design used and the population consisted of 12 active textile companies with 714 management staff. 6 textile mills with 403 staff representing 50% of the population were used as sample size. The validity and reliability of the instrument were established. Primary data collected were analyzed using descriptive and regression analysis method at 5% level of significance. The result obtained concluded that the sub-variables of the independent—cost, capacity and quality control have significant impacts on Nigerian textile mills closure (R = .776, R2 = .721, p < .05; R = .702, R2 = .683, p < .05; R = .658, R2 = .635, p < .05). The study recommended that instead of the complete shutdown of the textile mills, management of such organizations should have resort to buying from outside suppliers to meet customers demand and survive, maintain their staff, save investors’ fund and contribute their quota to the economy.

PUBLIC INTEREST STATEMENT

The basic objective of this research paper is to determine how management accounting through Make-or-Buy decision influenced the shutdown of various textile companies in Nigeria. This was accomplished through a research model where the cost of production, manufacturing capacity and product quality control as a make-or-buy decision proxy were regressed on business shutdown in the textile industry. The study sample size consisted of 6 textile mills with 403 management staff. The textile mills shutdown had some negative consequences on both the textile industry and the economy in general. The effect includes an increase in unemployment and poverty level, reduction in government tax revenue and loss of investors’ funds among others. The study concluded that the problem of a shutdown would have been averted if the management of those organizations resorted to buying from outside suppliers to meet the demands of their customers.

Additional information

Funding

No direct funding was received by the authors for this research.

Notes on contributors

Kenneth Enoch Okpala

Kenneth Enoch Okpala holds a PhD in Management Accounting from Babcock University. Senior Lecturer and Head of Accounting Programme, Department of Financial Studies, Redeemer’s University, Ede, Nigeria. He is a Fellow of the Institute of Chartered Accountants of Nigeria.

Sunday Mlanga

Sunday Mlanga is a PhD holder in Management Accounting from Babcock University. A Senior Lecturer and Head of Department, Accountancy/Business Administrations, Federal University, Ndufu Alike, Nigeria. Associate: Association National Accountants of Nigeria.

Anulika Odochi Nwajiuba

Anulika Odochi Nwajiuba, Holds M.Sc. and a Lecturer in the Department of Accountancy/Business Administration, Alex Ekwume Federal University, Ndufu Alike, Nigeria

Chimsunum Osanebi

Chimsunum Osanebi has recently completed his PhD in Business Management from Department of Management, University of Nigeria, Nssukka. He is an experienced banker, a management consultant and member of the Nigeria Institute of Management (Chartered).

Chuks Marcel Ezemoyih

Chuks Marcel Ezemoyih is a PhD holder in Education and a lecturer in the Department of Business Education, Alex Ekwume Federal University, Ndufu Alike, Nigeria