Raw Material Sourcing and Firm Performance: Evidence from Manufacturing Firms in South-West Bangladesh

Mohammed Ziaul Haider
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Mohammed Ziaul Haider: Associate Professor, Economics Discipline, Social Science School, Khulna University, Khulna–9208, Bangladesh.

Bangladesh Development Studies, 2010, vol. 33, issue 4, 51-61

Abstract: This study considers Khulna, Jessore, Satkhira and Bagerhat districts as the south-west region of Bangladesh. The manufacturing firms of the region have diverse characteristics. This diversity arises due to variety of products, firm size, ownership pattern, technology level and raw material sources. Bakery, brick, iron & steel, coconut oil, printing press, rice milling, tiles, wood processing and wood furniture are the main manufacturing firms of the region. This study describes the raw material sourcing pattern of the manufacturing firms. The intra-region raw material sourcing is the dominating tren d prevailing among the manufacturing firms of the south-west region of Bangladesh. Though the sales growth rates of such intra-region transactions are higher, the profit rates are lower than the rates for the firms dealing with outside the regions for raw material collection. The wider horizon of raw material source is positively related to the operating profit to sales ratio and negatively related to the sales growth rate. This trend indicates the necessity to expand raw material sources of the manufacturing firms for attaining higher profit–– the ultimate objective of a business entity. A massive improvement in infrastructure will encourage more firms to widen their horizon of input market. This point needs to be addressed properly for improving performance of the firms located in this region.

Keywords: Raw Material Sourcing; Firm Performance; Manufacturing Firms; South-West Bangladesh (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (10)

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