A key to structural growth and transformation is the evolution of large, highly productive firms. However, small, often single-employee firms, tend to dominate labour markets across developing economies. These small firms are less productive and are often limited in potential or desire to expand. The question arises then, how did the larger firms grow? This project investigates the structural, political, and entrepreneurial factors that explain the emergence and evolutions of large firms, specifically in Nigeria. It captures the factors that have most commonly contributed to the growth of large firms, answering questions about how this can be replicated to encourage current growth among smaller firms.
This project uses firm-level data in Nigeria to determine stylised facts about the growth and emergence of large firms in Nigeria. Sampling from a set of 130 manufacturing firms with at least 100 employees, secondary data from public reports and interviews is collected, as well as phone surveys from firm leadership. In addition to considering political and economic factors, the research team also look at the impact of gender by considering the firms’ history of female leadership and women in leadership positions. The researchers then distil these results to find trends and commonalities that may contribute to firm productivity and success.
This project’s novelty lies in its detailed look at the history of firms in a developing country and the factors that led to their current size and productivity. Many policies have focused on growing the number of firms within a sector, but firms often fail to grow in size. This research provides insight to policymakers about how to create more directed policies that foster an environment for firm growth. By considering the impacts of current and previous policies on firm growth, the researchers provide historical evidence for which policies have been most effective in the past and which have failed to foster economic development. Finally, while the research focuses on firms in Nigeria, the analysis will provide valuable lessons for firm growth in other countries and contexts.