The Effectiveness of the use of Backward Integration Strategy in Food and Beverage Manufacturing Firms in South-South Nigeria

Abstract

This study examined the relationship between backward integration strategy and the effectiveness of food and beverage manufacturing firms in South-South Nigeria, with effectiveness measured by productivity, sales growth, and profitability. A cross-sectional survey design was adopted. The population comprised 508 managers in selected registered food and beverage manufacturing firms, from which a sample of 224 managers was determined using Taro Yamane’s formula. A structured questionnaire was administered, and 188 usable responses were returned. Descriptive statistics were used to summarize the data, while the hypotheses were tested with Pearson’s product–moment correlation using SPSS version 23. The results show that backward integration was positively and significantly related to productivity (r = .823, p = .001), sales growth (r = .652, p = .001), and profitability (r = .614, p = .001), with N = 188 in each test. The evidence therefore indicates that firms that exercise greater upstream control over critical inputs tend to report stronger operational and financial outcomes. The study addresses a contextual and outcome-measurement gap by providing firm-level evidence from the food and beverage manufacturing sector in South-South Nigeria and by testing productivity, sales growth, and profitability within one empirical model. It concludes that backward integration can strengthen firm effectiveness when the benefits of supply assurance and coordination exceed the capital and managerial costs of internalization. Food and beverage manufacturers should therefore adopt backward integration selectively, based on input criticality, supply risk, asset specificity, and internal capability.