Where did Nigeria's large firms come from?

In a new project, I am asking, what explains the emergence of large firms in Nigeria? This is interesting for enterprise policy because we know from existing research that economic growth and structural change correlate positively with average firm size and negatively with the rate of sole-proprietorship in an economy. Indeed, structural change depends heavily on the development and accumulation of productive capabilities across sectors, organizations, and institutions, and this takes place more rapidly in larger firms. However, small and necessity-driven firms dominate the private sector in sub-Saharan Africa and this makes the case of some large formal firms that exhibit sustained growth and job creation potentials very interesting.

But barely any evidence exists on the factors that account for the emergence and progression of these outliers. Therefore, this project seeks to contribute such evidence to the ongoing discourse on structural change and private sector development in latecomer countries. The project will focus on manufacturing, an important sector for growth and structural change in developing countries. The rationale for the research objective is straightforward: if we know what systematically characterised today's large industrial firms when they were born, including the major political, structural, organizational and entrepreneurial challenges that they overcame on their road to largeness, then it will become easier to design industrial policies that will facilitate the emergence of similar firms.

Thus, three questions are pertinent. First, what are the structural, political and entrepreneurial factors that explain the emergence and evolution of large firms in SSA? Second, has gender played any significant role in the emergence of these enterprises (e.g. leaders at some point in the history was female, presence of large share of women in management, etc)? Third, are there extant or discontinued policies that have helped or deterred the growth of these firms? Considering the leadership position of the Nigerian economy in SSA, the evidence obtained will have relevant implications for other African (and developing) countries.

The project is funded by the Foreign and Commonwealth Development Office under its STEG initiative.