MANAGING POLITICAL RISKS FOR ORGANIZATIONAL PERFORMANCE IN MANUFACTURING SECTOR, SOUTH EAST NIGERIA

Abstract

The study was on managing political risks for organizational performance in the manufacturing sector of South East, Nigeria. As the business environment is becoming more complex. The manufacturing sector is striving to match objectives with performance. The political environment has not been helpful - its instability and the risks therein have been a downturn to the investment urge in the manufacturing sector. The study was motivated by the need to highlight the key political risk factors and proffer solutions so that the manufacturing sector can survive the turbulent situations. The study therefore sought to: ascertain the effect of interest rate on capital on volume of investment, assess the extent to which infrastructural decay affects the cost of doing business and also determine the effect of devaluation of currency on market share  among manufacturing firms in South east Nigeria, namely: Abia, Anambra, Ebonyi, Enugu and Imo.  The instrument was tested for reliability using Spearman’s rank correlation which gave r = 0.976 showing that there is a positive correlation between the responses from the respondents. Validity was tested by giving the instrument to five experts, three from the academia and two from the industry to measure face and content validity. The three hypotheses postulated were tested with ordinal logistic regression (OLR) using Statistical Package for Social Sciences (SPSS, version 20).Findings revealed that Interest rate on capital had a negative effect on volume of  investment (ß = 48.286, p = 0.009 < 0.05). Infrastructural decay had a significant negative effect on cost of doing business (ß = 59.405, p = 0.000 < 0.05). The study concluded that managing political risk factors will significantly enhance performance of the manufacturing firms. Therefore, recommended that the manufacturing sector should vigorously explore private capital as viable alternative to financing because of the risks associated with government institutions and also Government should encourage and maintain spending towards the manufacturing sector development and simultaneously develop the nation’s infrastructural facilities, in other to encourage domestic investors.