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Macroeconomic Volatility and Organizational Performance: A Contingency Theory Perspective from the Nigerian Corporate Sector

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  • Sanni, Philip Shakede
  • Ohiokha, Friday Izen

Abstract

Macroeconomic instability has continued to shape the operating environment of firms in Nigeria, creating uncertainty that affects business outcomes. This study examines the effect of macroeconomic volatility on organizational performance in the Nigerian corporate sector, while also considering the role of firm-level characteristics within a contingency theory framework. A longitudinal panel design was adopted, using secondary data obtained from the Central Bank of Nigeria, the World Bank, and financial reports of selected firms listed on the Nigerian Exchange over the period 2010–2024. Panel regression techniques were employed, including fixed and random effects models, with the Hausman test used to determine the appropriate specification. The findings indicate that macroeconomic volatility, particularly inflation, exchange rate fluctuations, and interest rate changes, has a significant negative effect on firm performance, while economic growth exerts a positive influence. The results further show that firm-level factors such as size, liquidity, and leverage significantly moderate this relationship. Firms with stronger financial capacity are better able to absorb macroeconomic shocks, whereas highly leveraged firms are more vulnerable to instability. The study concludes that organizational performance in Nigeria is influenced not only by external economic conditions but also by how firms adjust their internal structures and strategies. By applying contingency theory, the study provides a more nuanced explanation of performance differences across firms. The findings offer useful insights for managers seeking to improve resilience and for policymakers aiming to strengthen the business environment.

Suggested Citation

  • Sanni, Philip Shakede & Ohiokha, Friday Izen, 2026. "Macroeconomic Volatility and Organizational Performance: A Contingency Theory Perspective from the Nigerian Corporate Sector," SocArXiv 7vfsx_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:7vfsx_v1
    DOI: 10.31235/osf.io/7vfsx_v1
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    References listed on IDEAS

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    1. Tajudeen Egbetunde Ismail O. Fasanya, 2013. "Public Expenditure and Economic Growth in Nigeria: Evidence from Auto-Regressive Distributed Lag Specification," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 16(1), pages 79-92, May.
    2. Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(1), pages 85-106.
    3. Babajide Fowowe, 2011. "Financial Sector Reforms And Private Investment In Sub-Saharan African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(3), pages 79-97, September.
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