Business Diversification and Firms Value-Added In Consumer Goods: Assessing Nigerian Business Environment

Abstract

This study examined the effect of business diversifications on the firms’ value added consumer goods in Nigeria. An ex-post facto research design was adopted. The population comprised of 21 listed consumer goods firms on the Nigerian Exchange Group as of December 2024, of which 15 firms have complete data from 2012 to 2024, and were purposively sampled. Secondary data were collected from the firms’ annual reports, providing financial information relevant to the study variables. The formulated hypotheses were subjected to panel Generalized Least Squares regression. The findings indicate that: subsidiary diversification has a significant negative effect on value added to sales ratio among listed consumer goods firms in Nigeria, while regional and product diversification has a significant positive effect on value added to sales ratio among listed consumer goods firms in Nigeria. The study recommended that management of listed consumer goods firms should evaluate the strategic necessity and cost-effectiveness of establishing new subsidiaries. Moreover, management of listed consumer goods firms should evaluate the strategic necessity and cost-effectiveness of establishing new subsidiaries while product development and marketing departments within listed consumer goods firms should focus on optimizing and consolidating their product portfolios rather than continuously introducing new products.