Business organisation performance behaviour indicators in Ghana and Kenya: A comparative analysis

Abstract

We examined business organisation performance indicators across two African countries (Ghana and Kenya) with diverse and volatile economic variables. Utilising secondary data from 2007 to 2017, we applied fixed-effect panel regression to predict profitability indicators from business operations. Our findings indicated that operating cost per sales and assets had a negative relationship with profitability; while liquidity and sales had a positive relationship with profitability as measured by return on assets and profit margins in both countries. In Ghana, economic behavioural indicators, inflation, and exchange rate had a negative effect on return on assets; whereas currency in circulation, trade openness, and country competitiveness had a positive relationship with return on assets. In Kenya, the exchange rate had a negative non-significant relationship with profit margin, while currency in circulation was significantly and positively correlated with profit margin. Firm-specific variables (operating cost, assets, and sales) and macro-economic variables (inflation, exchange rate, currency in circulation, trade openness, and country competitiveness) appear to have an influence on the market behaviours of business organisations in two African countries.