Firm size and enterprise productivity in Nigeria : evidence from firm-level data

Abstract

Anchored on the economies of scale of production theory, this study utilized Nigeria’s firm-level enterprise survey data of the World Bank collected through stratified random sampling of 2 676 firms and face-to-face interviews with the application of the multinomial logit model to examine how enterprise productivity influences the size of firms in Nigeria. It was found that raising enterprise productivity relates to about 0.0009261 insignificant fall in the relative log odds of running micro-sized firms, about 0.010299 significant rise in relative log odds of having medium-sized firms, and about 0.0201428 significant encouragement in relative log odds of running large-sized enterprises/firms when related with small-sized enterprises/firms. It is recommended that governments at all levels (state, federal, and local), should encourage micro-sized firms in a bid to make them increase their productivity level. This encouragement can come in the form of providing increased access to credit, the provision of raw material inputs, and constant electricity supplies. The original contribution of this research work is hinged on its empirical contribution in the study area since there is dearth of literature in the study area as no study has looked at firm size and enterprise productivity in Nigeria using evidence from firm-level data.