Internal Control Mechanism and Operating Efficiency of Manufacturing Firms in Nigeria

Abstract

The study examined the effect of internal control mechanism on operating efficiency of manufacturing firms in Nigeria. The specific objective was to ascertain the effect of control environment and information and communication on operating efficiency of manufacturing firms in Nigeria. Cross-sectional survey design was used in the study. A sample size of 246 respondents was selected from a population comprising employees in the internal control units of manufacturing firms in Nigeria. A structured questionnaire was used to collect primary data for the study. Analysis of research questions was done using frequency distribution. Multiple regression analysis was conducted to test the hypotheses. It was found that: control environment has a positive and significant effect on operating efficiency of manufacturing firms in Nigeria (β = 0.273, p = 0.000); information and communication positively and significantly affect the operating efficiency of manufacturing firms in Nigeria (β = 0.171, p = 0.002). In conclusion, the implementation of effective internal controls is the key to unlocking greater operational performance and ensuring that manufacturing firms are well-positioned to thrive in a changing global marketplace. The study recommends that management teams in manufacturing firms should prioritize the development and implementation of clear organizational policies, ethical guidelines, and accountability structures in order to enhance operational efficiency by fostering a conducive work environment that promotes responsibility and compliance among employees.