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Effects of government policies on the performance of organizations in Ebonyi state

Effects of government policies on the performance of organizations in Ebonyi state



1.1: Background of the Study

Government may play a significant role in protecting local economy and promoting organizational development. And organizational policy and regulation are the basic instruments for the government to intervene and influence organizational evolution. Governments in Nigeria have implemented various organizational policies, regulations or laws in order to protect local markets or promote organizational development and economic growth.

          The governmental interventions are usually conducted in some basic policy form, including trade policies (e.g. tariff, quota and other anti-dumping measures) to protect the domestic market that is weak from unbeaten foreign competitors, support policies (e.g., tax incentives, subsidies, preferential loan, licenses, government contracts) to promote the development of domestic companies, and foreign investment policies (e.g., join venture regulation and local content rule) to create production capacity and employment, transfer technology and know-how, and link to the global market place.

The performance of the organization refers to those attitudes’ that have been assessed or measured as to their contribution to organizational goals (Cook and Hunsaker, 2001). The behavior or attitude indicated the approach and skills of the management specially line management that helps them to use the resources’ successfully and professionally with competency. However this competency is enhanced with the help of government policies. In nations around the world, organizational performance is an important determinant for economic growth and sustainability. How the relevant governing authorities support or hinder the chances of success in these areas will therefore be of interest to each nation concerned.

The forms of industrial policies vary across countries and regions, but their purposes simply centered in two: protection and development. In the developed countries, protection is the major purpose of industrial policies. The United States, which is self-assumed a “free-trade” country, also has anti-dumping measures in form of tax, tariff, quota and etc. to protect domestic industries from foreign competition, with which the domestic companies by themselves have no power to compete. Sometimes, developed countries also use policy options to promote the development of its specific less developed industries. As a matter of fact, the government industrial policies are more popularly used in the less developed countries with both of the protection and development purposes: to protect their immature domestic industries from foreign competitions, and to promote industrial development and catch-up.

Industrial policies have been widely and successfully used in the world, especially in the centrally planned economies like Japan and china to leap frog economic growth and the development of organizations, through many of these industrial policies, especially the protectionism policies, are always criticized by the advocators of the “free trade” principle. Japan’s fast economic growth and catching-up in nearly all major industries since the 1950’s largely attributed to the successful active government interventions through comprehensive industrial policies. And china’s comprehensive economic policies under the “reform and open” principle also have been driving the fastest economic growth in the world during the past two decades.

However, the success of industrial policies highly depends on the content of policies, the specifics of the industrial status, the political and economic environments and many other factors. The dynamics between industrial policies, industrial performance, and government system are complicated. Many developing countries in Latin America and Africa especially Nigeria failed to attain international competitiveness after 15 or 20 years of protection of similar governmental policies, which the eastern Asian countries took to succeed.

Ebonyi state was ranked 4th in top ten state with the highest internal generated revenue (IGR) (Wikipedia). Since the states don’t have much mineral deposits, the government heavily depends on the tax and duties of the organizations and infant industries for their development. As a result of this the chances for the survival of those infant industries are low since their taxes and duties are high and the government pays little or no attention are paid to them.

Ebonyi state doesn’t have government-intervened economic system (nation’s newspaper 2012). And, regarded as an infant industry, bakeries in Abakaliki are one of those industries that are regulated by government through their comprehensive set of industrial policies. Therefore the basic motivation of this study is to demonstrate and analyze the complex interactions and dynamics between government policies, organizational environment and organizational performance, with the case of a typical “infant industry” bakery in Abakaliki, Ebonyi state.

1.2: Statement of Problem

Study has it that if government impose more taxes & duties on a particular sector, then the profit margin of this sector will go down even businessmen can lose their interest to this sector and they can give up this business. Similarly if government give some taxation / duty facilities for any particular sector then businessmen will fell encourage investing in this sector as a result this sector will grow up.

It’s also important to note that if government ensures availability of loan with a reasonable interest through the monetary policy of the central bank then investment will go up and vice versa. The immature firms in the Ebonyi state have little chance to survive from the competition of the mature firms in the neighboring state that have been in the business for a long time, operating with high efficiency, low price and high quality for similar product or service. Therefore, the government of Ebonyi state should play a role to protect the immature industries and foster its growth.

This study will focus on the effects of government policies on the performance of organizations in Ebonyi state with a focus on bakeries in Ebonyi state.

1.3: Objective of the Study

1: to determine the relationship between government policies and organizational performance within bakeries in Abakaliki.

2: to examine the effect of government policy on pre-tax and post-tax income duties on bakeries in Abakaliki.

3: to determine the impact government policies have on the performance of bakeries in Abakaliki.

1.4: Research Questions

1: Does a government policy have significant relationship with organizations performance in bakeries in Abakaliki?

2: Does government policy have effect on pre-tax and post-tax income duties on bakeries in Abakaliki?

3: Does a government policy have significant impact on the performance of bakeries in Abakaliki?

1.5 Hypothesis of the Study

Hypothesis 1

H0: Government policies do not have significant relationship with organizations performance in bakeries in Abakaliki.

H1: Government policies have significant relationship with organizations performance in bakeries in Abakaliki.

Hypothesis 2

H0: Government policies do not have effect on pre-tax and post-tax income duties on bakeries in Abakaliki.

H1: Government policies have effect on pre-tax and post-tax income duties on bakeries in Abakaliki.

Hypothesis 3

H0: Government policies do not have significant impact on the performance of bakeries in Abakaliki.

H1: Government policies have significant impact on the performance of bakeries in Abakaliki.

1.6: Significance of the Study

This project work is a very important study as it provides insight into the effect of government policies on organizational performance and the relationship that exists between government policy and organizational performance. It provides information on government policies and their implications to the policy makers, educators, the media and the concerned business organization. To also ascertain the truthfulness weather government policy impacts negatively or positively on organization performance and proffer solutions and recommendations for right policy formulations in solving immature business problems. This study will also serve as a reference research work for the society’s further studies.

1.7 Scope of Study

This research covered effect of government policies on organizations performance, a study of bakeries in Abakaliki as the case study.

1.8: Limitations of the Study     

This study is limited to one academic year and also limited as a result of insufficient information and data. This study is also limited by time considering that the researcher had to attend to other aspects of her study other than the research work since both the research work and academic studies have to be done at the same time.

1.9 Brief Histories of the Bakeries under Study

This study is an effort which aimed at investigating the effect of government policies on organizations performance in three selected bakeries in Abakaliki. The first bakery which is evergreen bread is a sole proprietorship owned by Chief John Everest Eze and it is been managed by Eze Felix. The bakery has employee strength of about 20 employees and it is located at 4a Imuleri lane Abakaliki. The second bakery is golden star bakeries, it is a partnership business and it is managed by Mathias Emelunigini. The second bakery has about 14 employees and it is located at 1 Akanu Street Abakaliki. The last bakery is highlife bakeries. It is owned and managed by Chief Micheal Inemuo who inherited the bakery from his late father. It has staff strength of 32 staff who works in shifts, ranging from morning till evening. They are located at no 9 Nwankwo street off Afikpo road Abakaliki.

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