Sustainable Development in Nigeria's Manufacturing Sector: Exploring the Relationship between Organizational Sustainability and Firm Performance through the Lens of SDGs

Abosede Oluwayemisi Odewumi, Adewale Mathew Adekanmbi and Oladimeji Abeeb Olaniyi
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Abosede Oluwayemisi Odewumi: Department of Accounting, University of Ibadan, Nigeria.
Adewale Mathew Adekanmbi: Department of Economics, Dominion University, Ibadan, Nigeria.
Oladimeji Abeeb Olaniyi: Department of Economics, Faculty of Social and Management Sciences, Univesity of Ilesa, Nigeria.

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Abstract: The purpose of this study is to investigate the impact of sustainability practices on the financial performance of listed manufacturing firms in Nigeria over the period 2011 to 2023. Employing a longitudinal research design, the study compiles secondary data from annual financial reports of these firms. The data analysis, performed using panel least-squares estimators and fixed-effect regression analysis, reveals that sustainability practices exert a positive and statistically significant influence on Return on Equity (ROE), serving as a key proxy for financial performance from a management perspective. The study is also hinged on legitimacy theory in which the company's legitimacy depends on an implicit social contract with the society. The results emphasize that adopting sustainability practices contributes significantly to improving organizational performance, supporting the theoretical framework of legitimacy, which posits that firms fulfilling societal expectations gain advantages in financial performance and stakeholder relations. The study recommends that policymakers encourage manufacturing firms to integrate sustainability measures into their practices by offering incentives, such as tax reductions and subsidies, to those actively engaging in environmentally and socially responsible activities. These initiatives would not only enhance financial performance but also promote long-term corporate sustainability, supporting broader economic and environmental goals aligned with the Sustainable Development Goals (SDGs). This research contributes to existing literature by focusing on the Nigerian manufacturing sector, providing insights into the role of sustainable practices in emerging markets, which face unique regulatory and economic challenges in aligning with global sustainability standards.

Date: 2024-11-18
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Published in Asian Journal of Economics, Finance and Management , 2024, 6 (1), pp.378-387

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