conf paper_
-
Upload
oluwatomi-oyekan-nash -
Category
Documents
-
view
58 -
download
1
Transcript of conf paper_
1
Terrorism, Sectarian Violence and Logistics-Management: Assessing the Critical Factors
Affecting Selected Industries Operating in North-Eastern Region of Nigeria.
Sunday A. Adebisi, [email protected]
And
E.O. [email protected]
Department of Business Administration,University of Lagos, Akoka, Yaba, Lagos
AbstractFor more than a decade now, Nigeria has witnessed an unprecedented amount of terrorism;championed by violent religious sects in the North-Eastern region and resource control extremists inthe Southern region of Nigeria. Unfortunately, businesses are not immune from these environmentalcontingencies; which have constantly depleted the profitability and efficiency of business operations,particularly logistics activities. The study therefore investigated the extent to which terrorism inwhatever form, has affected the logistics activities within the value-chain of businesses operating inthe aviation, telecommunication and banking industry; as well as the critical factors that ultimatelyhamper cost advantage on the business.A cross-sectional survey research was adopted and fullycompleted 207 copies of a questionnaire were subjected to descriptive and factor analysis. With theaid of judgemental sampling techniques, businesses that were adjudged to be directly affected byterrorism in the volatile region were selected (i.e Arik Air, Kabo Air, Aero Contractor, First bank,Access bank, UBA, Unity Bank, Airtel, Globacoms, and MTN). The results showed that terrorism hasgreatly depleted the cost-advantage attributes of the various logistics activities (df = 15, χ² = 223.171,p < .001). Subsequently, government measures and transport effectiveness, effective logisticsmanagement and transport cost were ascertained as the critical success factors in the selectedindustries. The study therefore recommended that profit-oriented businesses must outsource cost-compounding activities (i.e; equipment maintenance, -0.7; physical structures, -1.01; andlogistics/transport, -1.1); as well as develop a workable understanding with the agencies responsiblefor the counter-insurgency effortsin the volatile North-Eastern region.
Keywords: Sectarian violence/ Terrorism, Factor-analysis, Value-chain, Profitability, Logistics,
Government measures, Critical factors.
2
1. INTRODUCTION
In recent years, businesses have suffered from unprofitable variation that amounts from the activities
of terrorism in the north-eastern region of Nigeria. Since the advent of ‘Boko-Haram’, the Nigerian
business environment, particularly in the North-Eastern region has been thrown into anarchy and gross
uncertainty as many firms have closed down their business activities out of frustration in this region of
Nigeria. Terrorism has been observed by Perry and Mankin(2005) to indirectly affect the functioning
of businesses. Even when the violence is not aimed at any business establishment, the attacks can
adversely affect the conduct of business related activities and behaviours of stakeholders; as evident in
today’s Nigeria. The stakeholders affected may include suppliers, customers, government,
transportation providers, communication service providers and the likes as opined by Hassan(2007).
Given that the activities these stakeholders conduct are embedded in the value chain or network of
businesses, there is a fundamental problem (Sheffi, 2001). Practically, an attack on educational
infrastructures like universities, secondary schools and polytechnics (Ohiwerei, 2014), will cripple the
business activities in the vicinity of attack; by scaring away potential and existing customers, suppliers,
highly skilful workforce, and investors alike. Likewise, an attack on the military formation of an area
or district will create fear of insecurity in the mind of stakeholders of businesses, hence, the decision of
divestment can be considered by the firm (Czinkota, Knight, Liesch, & Steen, 2005; Danjibo, 2011).
Majorly, business thrives when security of lives (stakeholders) and properties (assets, infrastructures,
and logistics) are, to a degree, assured (Briggs & Edwards, 2006). Any incertitude or perceived threat
as regards the safety of individual consumers, shareholders and stakeholders can be detrimental to
critical success variables like, brand loyalty, sales, turnover, customers’ retention, repeated purchase or
usage, profitability, and speculation–driven stock market. This is evident in the erratic movement of
stock prices in the Nigerian Stock Exchange over the years, given that the market capitalization fell by
23.9% in 2015 alone (Wasswa, 2015). However, terrorism sometimes comes in the way of day-to-day
logistics running (Sheffi, 2001). The consequence of this disruption can be loss of revenue,
underproduction, operation halting, or total shut-down (Frey, Luechinger & Stutzer, 2007). Ultimately,
this may lead to customers’ frustration or brand switching (Oladimeji& Oresanwo. 2014). In this wise,
the overall objective of the study is to evaluate the impact of terrorism on the critical logistics factors
in the aviation, telecommunication and banking industry operating in the North-Eastern region of
Nigeria.
3
2.0 REVIEW OF LITERATURE
The Social Identity theory
Social identity theory is greatly focused on how individuals with similar frustrations and anger engage
in group forming (Jerrold, 2008). Like minded agitators expectedly come together to form a group or
sect, with the aim of alleviating such perceived injustice; through legitimate or, as in the case of
sectarian violence, illegitimate means (Eneanya, 2014). The social identity theory was propounded by
a renowned psychologist Tajfel (1998). The assumption underlining the theory is synonymous to the
rationale behind the social relations of man. Naturally, human beings are known to be social animals,
which constantly strive for self-esteem and self-worth; which are further reflected in whatever group
the individuals form (Ogunrotifa, 2013). A religious or ethnocentric sect, as a group of individuals,
with common religious belief can therefore be justified by the theory of social identity (Danjibo,
2011). Consequently, Tajfel (1998) holds that a group or sect’s objective, philosophy and ideology are
consciously shaped by comparison between other related groups. This is evident in the fact that Boko
haram and other religious sects in West African region have been largely influenced by Al-Qaeda,
Taliban and ISIS in Asia and the Middle East; whose modus operandi, and tactics (such as public
shooting, suicide bombing and media propaganda) are being imitated by Boko haram and other violent
sects (Danjibo, 2011; Eneanya, 2014). Here lies the potentiality of the social identity theory in helping
industrial psychologists and business researchers alike to detect, understand and predict the
behavioural traits of terror-groups all over the world; in the quest to enhance enterprise preparedness,
survival and resilience.
Social identity theory justifies the reason why individuals in similar situations like, poverty, insecurity,
injustices, unemployment, inequalities and political marginalization assemble to fight a ‘common
enemy’, as in this case, the Nigerian government (Ogunrotifa, 2013; Eneanya, 2014). Hence, the
reasons why predominantly terrifying groups like Boko Haram, Ansaru, MEND (Movement for the
emancipation of the Niger-Delta), Niger-delta avengers and others come together to fight the Nigerian
government are not far-fetched (Jerrold, 2008). Social identity theory is vitally important in aiding
business owners and managers to understand its business environment. Therefore, a business
environment where there is a high level of poverty, perceived injustice and marginalization is a fertile
ground for terrifying groups to thrive (Gurr, 1970). The North-Eastern region and South-Southern
region evidently possess these socio-economic problems more than other regions in Nigeria (NBS,
2012); although this research is interested in the North-Eastern region of Nigeria.
4
The Survival-Based Theory of Management
Survival-based approach can be linked to Charles Darwin, the renowned biologist (Ologbo, Owolabi,
& Eugene, 2012). The underlining assumption of the theory is that; the ability to adapt to changes
within the environment is critical to the survival of living things (Harrod, 1939). Therefore, the
survival-based theory of strategic management is based on the assumption that, in order to survive in a
turbulent, uncertain environment, organizations must formulate and implement environmentally-
conscious strategies; as well as structures that can rapidly respond and adapt to the changes in
competitive environment (Khairuddin, 2005; Abdullah, 2010). Survival is human instinct, as much as
it is animal instinct (Harrod, 1939). The inability of the dinosaurs to adapt and react to the changes in
its environment, led to its ultimate and unfortunate extinction (Agbonifor, & Inegbenor, 2005). The
gospel of this theory is clear and straight forward; twenty-first century businesses are constantly faced
with series of internal and external challenges (Abdullah, 2010). These challenges may include
financial loss, low demand, erratic and failing social infrastructures, community clashes, los of key
staffs, and unfavourable environment (Khairuddin, 2005).
The responsibility to keep head above-water however lies largely on the manager’s experience, skills
and ingenuity in understanding its environment and turning thing around. Managers would normally
have to make tough decisions in the light of serious challenges, just for the business to survive
(Khairuddin, 2005). Decisions may include, production cut-down, downsizing, massive cut in
operational cost amongst other desperate actions (Sheffi, 2001; Abdullah, 2010). Survival based
strategic actions therefore position the firm in a way that fosters adaption to the environmental
conditions and attainment organisation’s goals (Jenkins, 2005). Evidently, individuals saddled with the
responsibility of managing logistics in the North-Eastern region must understand, adapt to changes in
the environment and constantly innovate; in order to survive the spate of Boko Haram and other
terrorists’ elements (Adebisi, Oyedeji & Azeez, 2015). Therefore, survival-based theory provides a
robust framework within-which the logistics activities of certain firms can be understudied to ascertain
the degree to which it can adapt to changing conditions in the industry, society and general
environment; in the quest for survival (Abdullah, 2010).
Terrorism and Sectarian Violence
Although several definitions exist for the concepts, there seems to be no universally accepted
definition. Simon (1994) observes that over 200 different definitions of terrorism are in use across the
world; due partly to the fact that most definitions are subject to regional calculations and perceptions
of the impact of terrorism itself (Cronin, 2003). This implies that the definition of terrorism in terror-
5
torn countries like Nigeria, Sudan, Somali, Iraq, etc, is likely to be contextually sound and daring. In
contrast, it would be mildly defined in countries like France, U.K, and Hungary (Lutz, 2004); which
have, until recently, witnessed only few terror-related attacks. Another reason for the inconclusive
definition is the inability of scholars to agree on the best definition, based on individual scholar’s
background, experience and exposure (Hoffman, 2006). It is important to equally distinguish between
sectarian violence and terrorism. Sectarian violence can be described as any violent act carried out by a
religious/fundamental sect, or group (Danjibo, 2011). While the establishment of a religious sect is not
illegal in most countries, violent actions posed by these sects can be termed to be terrorism (Eme,
2012). Laqueur (1987) defines terrorism as the use or threat of the use of violence, combating methods,
or a peculiar strategy to achieve certain targets. Hence it may be conceptually right to equate sectarian
violence (as perpetrated by Boko Haram and other sects in Nigeria) with terrorism.
Nonetheless, the fact that there is no general definition of terrorism, it is universally acceptable to state
that; terrorism is the use of violence to create fear (e.g, terror, psychic fear) for political, religious, or
ideological purposes; particularly aimed at unarmed targets in order to achieve the greatest attainable
publicity for a group, cause, or individual (Matusidz, 2013).
Boko-Haram and the Origin of Modern Sectarianism in Nigeria
Boko-Haram is a violent Islamist movement operating mainly in North-Eastern region of Nigeria; that
came to prominence in 2009; under the leadership of Mohammed Yusuf, a radical scholar (Adamu,
2009). Initially, the group and its leader were less lethal in crusading for the total Islamisation of
Nigeria (Cook, 2011); it began open harassments of citizen, which subsequently led to its gun war with
the Nigerian armed forces; and eventual death of its leader in 2009 (Danjibo, 2011). The 2009
confrontation largely decimated the group (Nossiter, 2012). The group subsequently reorganized, re-
strategized and resurfaced in 2010 with a renewed commitment to assassinations, public shootings,
unending suicide bombings, kidnapping, usage in improvised explosive device amongst others
(Danjibo, 2011; Onuoha, 2014).
Fig. 1
6
Source: Economist.com (2015): Boko-Haram Attacks’ Report.
Logistics as a Value-Creating Business Activity in the Face of Terrorism
Logistics entails the cost, activities and managements of assets and tasks associated with acquiring
resources needed for business operations (Porter, 1985). These resources may include fuel,
components, raw materials, office supplies, inventory management, and the likes (Pearce& Robinson,
2000). From the value-chain perspective, logistics can be divided into inbound and outbound
logistics. Outbound logisticsentails the cost, activities and managements of assets and tasks attached
with the physical distribution of products and services to consumers; as well as order processing and
warehousing (Kannegiesser, 2008). Ideally inbound logistics are linked to the operational activities,
while outbound logistics are incorporated in marketing and distribution function (Klumpp &
Koppers, 2008). Inbound logistics activities are critical to firms operations, be it production or
service oriented firms; as service-oriented businesses like telecommunication and banking firms
constantly require the movement of vital resources from its relevant suppliers for operations
(Kannegiesser, 2008).
Logistics is a vital part of any business’ supply chain. Generically, common security threat to a
business supply-chain includes piracy, theft, hijacking smuggling and other criminal activities.
Nigeria is no stranger to transportation insecurity. Although there have been no recorded plane
hijacking incidences, high-sea piracy, and oil theft activities are in high proportion in Nigeria
(Imogbihe, 2003). As Imogbihe (2003) holds, the factors responsible for this may include the infinite
numbers of creeks within the coastal region of the countries and the lack of a proper, comprehensive
border control framework befitting of a country as geographically immersed as Nigeria.
Terrorism sometimes comes in the way of day-to-day logistics running (Sheffi, 2001). The
consequence of this disruption can be loss of revenue, underproduction, operation halting, or total
6
Source: Economist.com (2015): Boko-Haram Attacks’ Report.
Logistics as a Value-Creating Business Activity in the Face of Terrorism
Logistics entails the cost, activities and managements of assets and tasks associated with acquiring
resources needed for business operations (Porter, 1985). These resources may include fuel,
components, raw materials, office supplies, inventory management, and the likes (Pearce& Robinson,
2000). From the value-chain perspective, logistics can be divided into inbound and outbound
logistics. Outbound logisticsentails the cost, activities and managements of assets and tasks attached
with the physical distribution of products and services to consumers; as well as order processing and
warehousing (Kannegiesser, 2008). Ideally inbound logistics are linked to the operational activities,
while outbound logistics are incorporated in marketing and distribution function (Klumpp &
Koppers, 2008). Inbound logistics activities are critical to firms operations, be it production or
service oriented firms; as service-oriented businesses like telecommunication and banking firms
constantly require the movement of vital resources from its relevant suppliers for operations
(Kannegiesser, 2008).
Logistics is a vital part of any business’ supply chain. Generically, common security threat to a
business supply-chain includes piracy, theft, hijacking smuggling and other criminal activities.
Nigeria is no stranger to transportation insecurity. Although there have been no recorded plane
hijacking incidences, high-sea piracy, and oil theft activities are in high proportion in Nigeria
(Imogbihe, 2003). As Imogbihe (2003) holds, the factors responsible for this may include the infinite
numbers of creeks within the coastal region of the countries and the lack of a proper, comprehensive
border control framework befitting of a country as geographically immersed as Nigeria.
Terrorism sometimes comes in the way of day-to-day logistics running (Sheffi, 2001). The
consequence of this disruption can be loss of revenue, underproduction, operation halting, or total
6
Source: Economist.com (2015): Boko-Haram Attacks’ Report.
Logistics as a Value-Creating Business Activity in the Face of Terrorism
Logistics entails the cost, activities and managements of assets and tasks associated with acquiring
resources needed for business operations (Porter, 1985). These resources may include fuel,
components, raw materials, office supplies, inventory management, and the likes (Pearce& Robinson,
2000). From the value-chain perspective, logistics can be divided into inbound and outbound
logistics. Outbound logisticsentails the cost, activities and managements of assets and tasks attached
with the physical distribution of products and services to consumers; as well as order processing and
warehousing (Kannegiesser, 2008). Ideally inbound logistics are linked to the operational activities,
while outbound logistics are incorporated in marketing and distribution function (Klumpp &
Koppers, 2008). Inbound logistics activities are critical to firms operations, be it production or
service oriented firms; as service-oriented businesses like telecommunication and banking firms
constantly require the movement of vital resources from its relevant suppliers for operations
(Kannegiesser, 2008).
Logistics is a vital part of any business’ supply chain. Generically, common security threat to a
business supply-chain includes piracy, theft, hijacking smuggling and other criminal activities.
Nigeria is no stranger to transportation insecurity. Although there have been no recorded plane
hijacking incidences, high-sea piracy, and oil theft activities are in high proportion in Nigeria
(Imogbihe, 2003). As Imogbihe (2003) holds, the factors responsible for this may include the infinite
numbers of creeks within the coastal region of the countries and the lack of a proper, comprehensive
border control framework befitting of a country as geographically immersed as Nigeria.
Terrorism sometimes comes in the way of day-to-day logistics running (Sheffi, 2001). The
consequence of this disruption can be loss of revenue, underproduction, operation halting, or total
7
shut-down (Frey, Luechinger & Stutzer, 2007). Consequently, this may lead to customers’ frustration
or brand switching (Oladimeji et.al. 2014). Another way to look at the effect of terrorism on the
inbound logistics of respective firms, is to ascertain its far-reaching consequences on the nation-wide
operations of firms; as the supply-chain of some firms cuts across regions and countries (Czinkota
et.al., 2005). A single terror attack in one region may likely disrupt the movement of goods, delivery
and people in a terrain that is critical to the business operations in other region (Rugman & Girod,
2003). Outbound logistics covers the activities involved in moving the finished products firm the
operational base to the final consumer (Hitts, Ireland &Hoskisson, 2008). A disruption in outbound
logistics activities may result into an increase in warehousing cost, epileptic delivery time and
frustration of marketing efforts (Norman & James, 1969). It is worthy to note that within logistics lies
transportation (Peck, 1990). Firms require the transportation of raw materials to their operational
base, as well as transportation of their offerings to the final consumers (Karlm & Orwart 2000).
The activities and cost of transportation goes a long way in determining customer satisfaction,
production effectiveness and overall cost management of a firm (Kannegiesser, 2008). Against the
backdrop of the 9/11 attack in New York; the U.S government through International Maritime
Organisation (IMO), took steps aimed at reducing the chances of shipways being used as a bed for
terrorists actions (Sheffi, 2001). Ever since, all the transportation systems have gained monumental
attentions relating to security (Drakos & Kutan, 2001). This is due to the fact that singular terrorists
attack can bring about unprecedented damages to an industry and by extension, the economy (Ryans
& Shanklin, 1980).
Empirical evidence points out that Boko Haram sometimes engage in organized crime like bank
robberies to fund its activities (Mantzikos, 2013). Incidentally,on the 6th of November, 2014, Boko
Haram insurgents robbed a bank and went further to steal dynamite and pick-up trucks from a
French-owned cement works in Ashaka, Gombe state (Aminu, 2014). The attack occurred just after
the sect robbed yet another bank in the state (Ngilari, 2014). This is just one out of numerous attacks
on banking institution in the North-Eastern region. Since it is apparently difficult for the Boko Haram
to garner the influence of assessing voluntary donations, hence the need to generate money through
bank robberies (Danjibo, 2011). The banking industry is a very vital subset of the business
ecosystem; as it serves as a provider of funds, loans, and a cash-keeper to business enterprises
(Muturi & Kanjara, 2014). Terrorism can most likely increase the level of risk in the banking
industry, particularly when the value chain is complex and large (Gross & Spiche, 2009).
8
The telecommunication industry was yet another sector of the economy that has been badly hit by the
insurgencies in the North-Eastern part of Nigeria (Adebisi et.al., 2015). Bomb attacks on
telecommunication installation and structures, particularly in the Northern part of Nigeria steadily
affected the economy (Farouk, 2012). As a result, critical sectors like the banking, security,
manufacturing, and others whose efficiency and effectiveness is dependent on telecoms, have been
severed from the operating economy (Cook, 2011). Recent counter-insurgency wars in developing
countries like Afghanistan, India, and Iraq have observed that critical telecommunication
infrastructures are easy targets for terrorists (Cook, 2011). This is a development that analysts have
termed ‘cell war’ (Onuoha, 2013). After previous threats on telecommunication infrastructures by
Boko-Haram for their (Telecoms firms) role in aiding the government in facilitating the capture of
their members in 2012; the notorious group carried out their threat by launching a 2-day intensive
destruction of telecoms facilities in 6 Northern States; namely Adamawa, Bauchi, Gombe, Borno,
Kano, and Yobe State (Omemma, 2012; Onuoha, 2014). Consequently, over 160 base stations were
damaged by Boko Haram (Okonji, 2013). The telecommunication industry has suffered
unprecedented amount of personnel, financial and service delivery costs as a result of these deadly
attacks.
The aviation sector is not left-out in the economic onslaught spear-headed by Boko Haram, and other
terrorist group in Nigeria. Owing to the fact that the 9/11 bombing of the world trade Center that was
executed through the use of two hijacked planes, fear has gripped the aviation sector for years
(Sheffi, 2001). In acknowledgement of the status of the Nigerian aviation sector as the gateway for
investment, tourism, and logistics; anxiety and despair has led to a decline in the numbers of
travellers en-routing the North-Eastern airspace of Nigeria (Omemma, 2012). Given the fact that the
Boko-Haram sect has in its possessions anti-aircraft guns; commercial fliers considers some states in
the region a no-fly zone. Following the ill-fated suicide bombing of a craft by Nigeria-born,
Abdulmutallab in December 2011, and the United State House of Representative report suggested
that the aviation and energy sector of Nigeria are potential targets of Boko Haram (Adedoja, 2011).
Consequently, on the third of December, 2013, Boko Haram attacked the Maiduguri airport and burnt
down 5 aircraft, which led to the shutting down of the Maiduguri airport by Federal Aviation
Authority of Nigeria (Onuoha, 2014). The effects of terrorism on the activities in the aviation sector
were huge for passengers became wary of any flight to that part of Nigeria. It affects critical activities
like logistics, movement of key workers and underling region-wide marketing efforts (Farouk, 2012).
9
The role of government can be specifically critiqued in the matter of counter-insurgency efforts
(Victoroff, 2005). The most valid explanation for the incessant violence, including religious and
sectarian violence, is the lack or failure of good governance in Nigeria; a domain which business
owners have no control over (Lacey, 2012; Danjibo, 2011). Unfortunately, the odds are mostly
against businessmen (Czinkota et.al, 2005). In actual fact, the rapid growth of sectarian violence in
the North-Eastern region can be traced to the chronic poverty and underdevelopment that has existed
in the region for decades (Lacey, 2012). Subsequently, certain counter-insurgency measures, in form
of policies and regulations imposed by the government, affects the conducts of some industries’ value
chain activities; which may lead to transactional and logistics cost (Aggrawal, 2006; Grosse &
Spiche, 2005). Undoubtedly, these measures are telling on the efficiency and effectiveness of
logistics (Sheff, 2001; Czinkota et.al., 2005, 2009). This calls for a paradigm shift from when the
business environment was a jungle of related and unrelated activities conducted by different firms,
doing everything to maximize profit. Consequently, business managers must critically select the
chain of activities that would best aid its attainment of competitive advantage and profitability
(Porter, 2008)
3. METHODOLOGY
Given the fact that the study is largely descriptive in nature, questionnaire (Drop-and-collect) was
used as the sole research instrument to collect primary data. The copies of questionnaires were
administered at the headquarters of the ten (10) selected businesses. Seven (7) Likert-scale responses
were adopted for measurement (i.e, extremely agree, strongly agree, agree, indifferent, disagree,
strongly disagree, extremely disagree). The primary data collected were analyzed using the Factor
analysis; in order to ascertain a set of dimension that may not be readily observed in a large set of
variables (Jackson, 2007). The factor analysis was particularly helpful in identifying factors that are
critical to the effective management of a business’ logistics function; towards attaining cost
advantage and overall performance. The factor loading value used for the analysis was 0.3642, given
that the sample size was around 200 (Stephen, 2002). Also, factors with Eigenvalues above 0.7 were
considered for extraction, given that the factors within the modelwereless than 30 (Jolliffe, 1972,
1986).
To test the hypothesis,5% (0.05) level of significance was adopted. The decision rule was such that;
when the significance value (sig) of a tested model (provided by Barlette’s measure) is less than the
level of significance (0.05), the null hypothesis will be rejected as being false. Hence, the alternative
hypothesis will be accepted. SPSS Statistical tool (21.0) was utilized for the purpose of analyzing the
10
data for this study. The study population of this cross-sectional survey included the aviation,
telecommunication and banking industry; with the corresponding total of ten (10) firms which are
operationally present in the North-Eastern region of Nigeria, as tabularized below:
Table 1
Researcher (2016): Distribution of the study sample
Using judgemental sampling technique, the criterions for selecting the above firms were;
1. Critical industries which have been badly hit by the wave of terrorism in the North-Eastern
region.
2. Firms that operate nationwide, but have been directly or indirectly impacted by the sectarian
violence in the North-Eastern region of Nigeria
3.3 Model Specification
H0 = There is no significant relationship between terrorism and cost advantage of inbound and
outbound logistics of businesses in the North-Eastern region of Nigeria
Model 1 - Terrorism and Logistics (TLS)
STVCM = (TLS)
TLS = (TLS,TTR, TMS,TGM,TCT,TET,TLP)
TLS = β1TTR + β2TMS+ β3TGM+ β4TCT+ β5TET + β6TLP
Industry Firms Copies Distributed Copies Retrieved
A. Aviation 1.Aero Contractors 15 14
2. Kabo Airlines 15 11
3. Arik Air 25 22
B. Banking 1. First Bank 30 25
2. Access Bank 30 28
3. Unity Bank 25 23
4. UBA 30 26
C. Telecommunication 1. MTN Nigeria 25 18
2. Airtel 25 19
3. Globacoms 25 21
Total 245 207
Percentage Total (%) 100.0 84.4%
11
Given that:
TLS = Terrorism and Logistics (Inbound and outbound movement of goods and people
critical to the operation of businesses)
TTR = Terrorism and resource-input transportation (The sets of activities )
TMS = Terrorism and market supply
TGM = Terrorism and government measures
TCT = Terrorism and cost of transportation
TET = Terrorism and employee transportation
TLP = Terrorism and logistics planning/control
β = Factor Loading
4. RESULTS
Fig. 4.
Source: Field Survey (2016). Distribution of respondents by Industry
The above chart illustrates that 58% of the respondents works in the banking sector, while aviation
and the telecommunication sector account for 22% and 20% of the respondents respectively.
Therefore, the banking industry largely contributed to the response pool, in contrast to other
industries.
11
Given that:
TLS = Terrorism and Logistics (Inbound and outbound movement of goods and people
critical to the operation of businesses)
TTR = Terrorism and resource-input transportation (The sets of activities )
TMS = Terrorism and market supply
TGM = Terrorism and government measures
TCT = Terrorism and cost of transportation
TET = Terrorism and employee transportation
TLP = Terrorism and logistics planning/control
β = Factor Loading
4. RESULTS
Fig. 4.
Source: Field Survey (2016). Distribution of respondents by Industry
The above chart illustrates that 58% of the respondents works in the banking sector, while aviation
and the telecommunication sector account for 22% and 20% of the respondents respectively.
Therefore, the banking industry largely contributed to the response pool, in contrast to other
industries.
AVIATION22%
TELECOMS20%
BANKING58%
Industry
11
Given that:
TLS = Terrorism and Logistics (Inbound and outbound movement of goods and people
critical to the operation of businesses)
TTR = Terrorism and resource-input transportation (The sets of activities )
TMS = Terrorism and market supply
TGM = Terrorism and government measures
TCT = Terrorism and cost of transportation
TET = Terrorism and employee transportation
TLP = Terrorism and logistics planning/control
β = Factor Loading
4. RESULTS
Fig. 4.
Source: Field Survey (2016). Distribution of respondents by Industry
The above chart illustrates that 58% of the respondents works in the banking sector, while aviation
and the telecommunication sector account for 22% and 20% of the respondents respectively.
Therefore, the banking industry largely contributed to the response pool, in contrast to other
industries.
12
4.2. Test of Hypotheses and Discussion of Findings
Hypothesis 1 (Terrorism and Logistics)
H0 = There is no significant relationship between terrorism and cost advantage of inbound and
outbound logistics of businesses in the north-eastern region of Nigeria.
Table 3..Correlation Matrixa
TTR5 TMM5 TGM5 TCT5 TET5 TLP5Correlation TTR 1.000
TMM .295 1.000
TGM .478 .268 1.000
TCT .303 .279 .376 1.000
TET .439 .399 .464 .328 1.000
TLP .183 .103 .231 .176 .271 1.000Sig. (1-tailed) TTR .000 .000 .000 .000 .004
TMM .000 .000 .000 .000 .070
TGM .000 .000 .000 .000 .000
TCT .000 .000 .000 .000 .005
TET .000 .000 .000 .000 .000
TLP .004 .070 .000 .005 .000
a. Determinant = .333
Source: SPSS Data Output (2016)
Table 4.
Anti-image Matrices
TTR5 TMM5 TGM5 TCT5 TET5 TLP5
Anti-imageCovariance
TTR .695 -.078 -.203 -.065 -.142 -.024
TMM -.078 .804 -.020 -.113 -.190 .027
TGM -.203 -.020 .652 -.150 -.156 -.069
TCT -.065 -.113 -.150 .800 -.069 -.057
TET -.142 -.190 -.156 -.069 .639 -.126
13
TLP -.024 .027 -.069 -.057 -.126 .907
Anti-imageCorrelation
TTR .803a -.105 -.302 -.087 -.213 -.030
TMM -.105 .798a -.027 -.141 -.265 .032
TGM -.302 -.027 .779a -.207 -.242 -.090
TCT -.087 -.141 -.207 .843a -.096 -.067
TET -.213 -.265 -.242 -.096 .781a -.165
TLP -.030 .032 -.090 -.067 -.165 .829a
a. Measures of Sampling Adequacy(MSA)
Source: Field Survey (2016)
Table 5.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .798Bartlett's Test of Sphericity Approx. Chi-Square 223.171
Df 15
Sig. .000
Source: SPSS Data Output (2016)
Fig 5.
Source: Field Survey (2016)
Table 6.Rotated Component Matrixa
14
Component
1 2 3 4
TTR = Terrorism and resource inputtransportation 0.847
TGM = Terrorism and government measures 0.777
TET= Terrorism and employee transportation0.591 0.479
TMM = Terrorism and market supply 0.945
TLP = Terrorism and logistics planning/control0.978
TCT = Terrorism and cost of transportation 0.952
Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.
SPSS data Output (2016)
Table 7
Total Variance Explained
Component
Initial EigenvaluesExtraction Sums ofSquared Loadings
Rotation Sums of SquaredLoadings
Total% ofVariance
Cumulative % Total
% ofVariance
Cumlative % Total
% ofVariance
Cumulative %
GTE 2.589 43.149 43.149 2.589 43.149 43.149 1.749 29.153 29.153
MSF 0.913 15.213 58.362 0.913 15.213 58.362 1.169 19.481 48.634
TLM 0.760 12.668 71.030 0.76 12.668 71.030 1.045 17.421 66.055
TTC 0.726 12.108 83.138 0.726 12.108 83.138 1.025 17.083 83.138
0.526 8.768 91.905
1.486 8.095 100.000
Extraction Method: Principal Component Analysis.
Source: SPSS Data Output (2016)
Table 8.
Component Score Coefficient Matrix
Component
1 2 3 4
TTR .632 -.122 -.159 -.216
TMM -.222 .952 -.074 -.050
TGM .511 -.243 -.052 .098TCT -.174 -.080 -.054 1.060
TET .256 .304 .129 -.174
TLP -.128 -.046 1.002 -.045
15
Component Score Coefficient Matrix
Component
1 2 3 4
TTR .632 -.122 -.159 -.216
TMM -.222 .952 -.074 -.050
TGM .511 -.243 -.052 .098TCT -.174 -.080 -.054 1.060
TET .256 .304 .129 -.174
TLP -.128 -.046 1.002 -.045
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Component Scores.
Source: Researcher (2016)
Interpretations
As Table 3 indicated above, the determinant given by the correlation matrix is 0.333 (det >0.00001),
meaning that the model did not suffer any form of multi-collinearity.The Kaiser–Meyer–Olkin
measure value for the terrorism-logistics model in Table 5 is given as 0.798, which showed that the
sample size was very good for the model, according to Field (2009). Also, pointing the adequacy of
the sample tested, the KMO values (0.695, 0.804, 0.652, 0.8, 0.639, and 0.907) of the covariance in
the anti-image matrix (Table 5) were all greater than the acceptable limit of 0.5;
For the test of hypothesis, the Bartlett’s test output (df = 15, χ² = 223.171, p < .001) in Table 5
showed that the correlation between the items were large enough to predict behaviours of the
variables. Given that the p<0.05 (0.0000) level of significance, the null hypothesis is rejected.
Therefore, the cost advantage of the firm in the North-Eastern region, through its inbound and
outbound logistics has been greatly affected by terrorism.
Generation of New factors (Interpretation)
As the Scree Plot graph showed in Figure 5, three factors below the predetermined Eigen-value of 0.7
were eliminated. Hence, four new factors (hidden) were produced by the SPSS based on the
conditional correlation benchmark of 0.5. The seven constructs were extracted and rotated to produce
three new factors that were highly correlated (R* > 0.5). As evident, the rotated component matrix in
Table 6, produced the four new factors that cluster on similar components which can be deduced as
thus:
Table 9: New factors
New Factors ElementsF1: Government measures and = TTR (Terrorism and resource input transportation) + TGM
16
GTE transport effectiveness (Terrorism and government measures) + TET (Terrorism andemployee transportation)
F2:MSF
Market supply fluctuation = TMM (Terrorism and market supply)
F3:TLM
Logistics management = TLP (Terrorism and logistics planning/control)
F4:TTC
Transport cost = TCT (Terrorism and cost of transportation)
Source: Field Survey (2016)
Prevalence of factors (Interpretation)
From the analyzed model, the initial PCA analysis (Principal component analysis) resulted into the
extraction of three new components; which had Eigen-value that were greater than the 0.7 criterion
of Joliffe (1986). Subsequently, it was discovered in Table 7, that government measures and
transport effectiveness accounted for 43% of the variation in the model. Market supply fluctuation
accounted for 15% variation. Logistics management accounted for 12%, while transport cost
accounted for 12% in the model. Hence, the four new factors accounted for over 83% (83.138) of
the variance in the model, which informed the conclusion that the four factors were the most
prevalent constructs/variable within the model. However, after the rotation of the four (4) prevalent
constructs, their individual variance percentages reduced; although their cumulative values were
still 83%.
Furthermore, a new factor equation can be constructed from the factor loading (β) as obtained from
Table. 8, i.e; TLS = GTE (Government measures and transport effectiveness) + MSF (Market
supply fluctuation) +TLM (Logistics management) + TTC(Transport cost)
i.e. GTE = 0.632TTR–0.222TMM+0.511TGM-0.174TCT+ 0.256TET -0.128TLP
MSF =-0.122TTR+0.952TMM-0.243TGM-0.08TCT+ 0.304TET -0.046TLP
TLM =-0.159TTR-0.074TMM-0.052TGM-0.054TCT+ 0.129TET -1.022TLP
TTC = -0.216TTR-0.05TMM+0.098TGM+1.06TCT- 0.174TET -0.045TLP
17
Table 10: Cross-sectional analysis of Aviation, Telecommunication and Banking Industry
Hypotheses REGRESSION FACTOR (RF)H= Hypothesis. ; F = Factor
AVIATION(RF-SCOREMEAN)
TELECOMS(RF-SCOREMEAN)
BANKING(RF-SCOREMEAN)
Hypothesis one(Terrorism andLogistics ofbusinesses)
Government measures & transporteffectiveness (GTE)H1F1
0.01 -1.16 0.210
Market supply fluctuation (MSF)H1F2 -0.26 -0.49 0.182Logistics management (TLM)H1F3 0.68 -0.057 -0.218
Transport cost (TTC)H1F4 -0.02 0.057 0.094Source: Spss Data Output (2016)
With regards to logistics, the aviation sector would rather manage its logistics functions (0.6) to
offset market supply fluctuations (-0.2). The case is the same for the telecommunication sector,
which would rather outsource both logistic management functions in order to offset the market
supply fluctuation (0.5). It is worthy to note here that government measures have negatively
affected the overall logistics of the telecommunication industry (-1.16). This finding is somewhat
in line with realities in the North-Eastern region where strict clamp down has led the government
to forcefully shut down the telecommunication masts for security reasons (Aminu, 2014).
Government measures have also affected market supply functions of the banking sectors;
although the positive RF-Mean indicates that the banking firms would rather control its market
supply activities.
Summary of findingsThe study revealed that;
1. There is a significant relationship between terrorism in the North-Eastern region and cost advantage
of logistics activities (df = 15, χ² = 223.171, p < .001). Therefore, the cost advantage of the firm in
the north-eastern region, through its inbound and outbound logistics has been greatly affected by
terrorism. During the course of analyzing the data, factor such as government measures and transport
effectiveness, market supply fluctuation, logistics management and transport cost cumulatively
accounted for 83.1% variation of the terrorism-logistics model. Government measures and transport
effectiveness, which accounted for 29.15% variation in the model, was a function of resource input
transport, government measures and employee transportation. Market supply fluctuation, which was
a lone function of the effect of terrorism on market supply, accounted for 19.4% variation in the
model. Logistics management, which was also a lone function of the effect of terrorism on logistics
and planning control accounted for 17.4% variation in the model. Finally, transport cost as a lone
function of the effect of terrorism on the cost of transportation accounted for 17.08% variation in the
model. In light of terrorism, cost advantage driven businesses cannot overlook the criticality of
18
logistics. The finding was therefore in-line with the findings of past researchers (Sheffi, 2001;
Branzei & Abdelnour, 2010).
2. The cross-sectional investigation of the regression factor scores of the aviation, telecommunication
and banking industry revealed that the logistics function of the aviation and the telecommunication
industries were the sectors worst-hit by terrorism. This finding was consistent with the assertion of
Sheffi (2001) on the vulnerability of logistics to terrorism; particularly, counter-terrorism efforts of
government.
5. POLICY IMPLICATION OF THE RESEARCH
Generically, the control of the logistics of businesses in the North-Eastern region of Nigeria should
be decentralized to regions & states where the firms operate; in order to enable flexibility of
structures and prompt decision making. Given the fact that terrorism incidents in the region are
virtually unpredictable, respective managers in each region should be provided with a reasonable
amount of autonomy to determine what logistics activities or function to in-source or outsource. Such
provision will ultimately result into a resilient value-chain or network for the business to compete
effectively. Other industry-specific policy implications include;
For the aviation industry1. Businesses in the aviation sector must focus on critical service and process innovation such as re-
modification of ticketing booking process, boarding process, and other logistics processes; which will
ultimately enhance cost advantage. Additionally, major aviation companies operating in the North-
Eastern region must formulate and implement standard operating procedures with its value-chain
players in the downstream sector (e.g, travel agents, tour operators, cargo integrators); in order to
ensure that its corporate goals, in this trying time, are not sabotaged.
2. In order to linearize operation of their businesses, airline operators should constantly conduct
appraisal of the functionality of the equipment within its control (such as airplane, pilots, staff), as
well as, establish a mutual understanding with management of equipments outside its control (such as
control towers, runways, e.t.c).
For the telecommunication industry
1. Collaborative efforts should, instead of competition, be encouraged among firms in the
telecommunication industry; given the affirmed similarity in the value-chain networks of firms in the
industry. Therefore, through collaborations and strategic partnership in some business activities such
19
as maintenance of masts and logistics, competing telecoms business can consolidate on the cost
leakages and discrepancies of revenue that it currently experience.
2. Logistics activities that involve the movement of fuel, components, raw materials, office supplies,
inventory management should be outsourced in the telecoms sector; given the high variation that
logistics contributes to the cost-disadvantages of businesses in the telecommunication sector. In the
light of any unexpected effect on its value-chain partners, managers must consolidate on its business
network outside the region to linearize operations and reduce disruptions detrimental to its profit
goals.
For the Banking Industry
The banking sector must outsource the management of its logistics to focus more on harnessing its
cost advantage; given that the study shows a negative direction of the management of its logistics
functions. Furthermore, it must leverage on the positives it garners from the counter-insurgency
measures to build a robust and environmentally resilient logistics function.
REFERENCES
Abdullah, T. M. (2010) Profit maximization theory, survival-based theory and contingency theory: a
review on several underlying research theories of corporate turnaround.Jurnal ekonom,
13(4),136-143
Adamu, F. I. (2009). Ideology of Boko Haram. Journal of Islamic Education. 2(2) 31-24.
Adebisi, S.A., Oyedeji, R., and Azzez, O. (2015) Boko haram insurgency in Nigeria: defining,
addressing and understanding its impact on telecommunication industry. International Journal
of Economics and Management research, 5(1), 1-8
Adedoja T. (2011, December 2). Boko Haram Targets Aviation, Energy Sectors, Warns US
House.Thisday Newspaper Retrieved on December 11, 2015 from http://www.thisdaylive.
Adedoja T. (2011, December 2). Boko Haram Targets Aviation, Energy Sectors, Warns US
House.Thisday Newspaper Retrieved on December 11, 2015 from http://www.thisdaylive.
Briggs, R., and Edwards C. (2006). The business of resilience. London, UK: Demos Publising.
com/articles/boko-haram-targets-aviation-energy-sectors-warns-us-house/104102/.
Cronin, A. K. (2003). Behind the Curve: Globalization and international terrorism. International
Security Journal, Vol. 27(3), 30-58.
Czinkota, M. R., Knight, G. A., Liesch, P. W., & Steen, J. (2005). Positioning terrorism in
management and marketing: Research propositions. Journal of International Management,
11(4): 581-604.
20
Danjibo N. D., (2011). Islamic fundamentalism and sectarian violence: the “maitatsine” and “boko
haram” crises in northern nigeria. boko haram crises in northern nigeria. Peace and Conflict
Studies Paper Series, Institute of African Studies, University of Ibadan, 1-21.
Douglas, T. J., and J. A. Ryman, 2003, Understanding competitive advantage in the general hospital
industry: Evaluating strategic competencies, Strategic Management Journal, 24: 333–347.
Drakos, K. and A. Kutan (2001). Regional Effects of Terrorism on Tourism: Evidence from Three
Mediterranean Countries. Centre for European Integration Studies: Bonn, 25
Eme, O.I, and Ibietan, J. (2012). Activities of boko haram and insecurity question in Nigeria, Arabian
Journal of Business and Management Research, 1(9), 77-99.
Eneanya, A. E. (2014). Terrorism and global domestic insurgency nexus: a case of boko haram
insurgency in Nigeria. Journal of Public Management & Social Policy, 21(6), 78-94
Farouk, C. (2012). ‘Who are Nigerian’s Boko Haram Islamists?’ BBC News, Retrieved
11/01/2016 from www.bbc.co.uk/Africa/who-are-nigeria-boko-haram
Frey, Β., Luechinger, S., and Stutzer, Α. (2007). Calculating tragedy: Assessing the costs of terrorism.
Journal of Economic Surveys, 21(1), 1-24
Frohlich, M.T., and Westbrook, R., (2001). Arcs of integration: an international study of supply
chain strategies. Journal of Operations Management, 19 (2), 185–200.
Grosse, R., & Spich, R. (2009). Terrorism and global banking. In T. Pedersen & T. Kiyak (Eds).
Proceedings: 2009 Annual Conference, Academy of International Business. San Diego, USA.
Hammer, M and Champy, J. (1993). Re-engineering the Corporation: A Manifesto for Business
1Revolution. New York: Harper Business.
Hitt, M A, Ireland, R. D, and Hotkinson, R. E (2008). Strategic Management. Concepts and Cases. 8th
Edition. South-Western Publishing.
Iyayi, F. (2005) Understanding the Nigerian Work Organisation. In Agbonofor, Agbadudu, and Iyayi.
Management: A Nigerian Perspective. Lagos: Malthouse Books
Jackson, O. (2007). Data Analysis. In Saliu. H. A and Fayeye, J.O. eds Further Readings on Research
Methodology. Ilorin; FBAS Publishing, 55-88
Jackson, O. (2007). Data Analysis. In Saliu. H. A and Fayeye, J.O. eds Further Readings on Research
Methodology. Ilorin; FBAS Publishing, 55-88
Jenkins, W. (2005). Competing in Times of Evolution and Revolution. Management Decision, 43(1),
26-137
Jerrold, M. P. (2008). The mind of the terrorist: The psychology of terrorism from the IRA to al-Qaeda
New York: Macmillan Publishers.
21
Jolliffe, I. T. (1972). Discarding variables in a principal component analysis, I: Artificial
data.Applied Statistics, 21, 160–173.
Jolliffe, I. T. (1986). Principal component analysis. New York:Springer.
Khairuddin, H. M. (2005). Strategic Management. Singapore: Thomson Learning.
Koppers, L., Klumpp, M., and Kürble P. (2010). Value chain management. Integrating marketing and
logistics. 16th International Working Seminar on Production Economics, Conference
Proceedings,Innsbruck. 4(1), 93-104.
Ma, H. (1999). Anatomy of competitive advantage: a SELECT framework. Management Decision, 37
(9), 709-718.
Mantzikos, I. (2010). The absence of state in Northern Nigeria: The case of Boko Haram, African
Renaissance, 7 (1), 57-62.
Muturi, P. M and Karanja, T. (2014). Value chain analysis of a commercial bank a case of equity bank
in Kenya. International Journal of Economics, Commerce and Management, 2(6), 1-13
Narasimhan, R., Das, A., (2001). The impact of purchasing integration and practices of manufacturing
performance. Journal of Operations Management, 19 (5), 593–609.
Ngilari, J. (2014). Boko Haram will overrun Adamawa governor cries out to Jonathan. Nigerian
voice, November, 7.
Nossiter, A. (2012). Boko Haram’s Deadly Rage has Local Roots. in Tell Magazine, Lagos, October
8, 2012
Ogunrotifa, A. B. (2013) Class Theory of Terrorism: A Study of Boko Haram Insurgency In Nigeria
Research on Humanities and Social Sciences, 3(1), 27-59
Ohiwerei, F. O. (2014). Effects of boko haram insurgency/terrorism in business education in nigerian
universities. Scholarly Journal of Education, 3(9), 163-171
Okonji, E. (2013, January 7). Replacement of Damaged Base Stations to Cost Telcoms N16bn,
Thisday Newspaper. Retrieved on August 28, 2015; from http://www.thisdaylive.com
/articles/replacement-of-damaged-base-stations-to-cost-telcos-n16bn/135598/
Oladimeji, M. S., and Oresanwo, A. M., (2014). Effects of terrorism on international business in
nigeria. International Journal of Humanities and Social Science. 4, (7), 247-255
Ologbo A.C., Owolabi S. O., and Eugene O.K (2012). Strategic management theories and the linkage
with firm competitive advantage from the human resource-based view. International Journal of
Research in Management & Technology, 2(4), 366
Omemma, D.A (2012). Terrorism and the Challenges of Leadership: the Nigeria Experience. A Paper
Presented to the Political Science Department, Caritas University Seminar on June, 2012.
22
Onuoha, F. C, and Ezrim, G. E. (2013). Terrorism and transnational organized crime in West Africa.
Aljazeera Center for Studies Report. Retrieved on October 14, 2015 from
http://studies.aljazeera.net/en/reports/2013/06/2013624102946689517.html
Pearce J. A., and Robinson R. B., (2003). Strategic Management: Formulation, Implementation and
Control. McGraw-Hill Press
Perry, R. W., and Mankin, L. D. (2005). Preparing for the unthinkable: managers, terrorism and the
HRM function. Public Personnel Management. 34 (2), 175-187
Porter, M. (1985) Competitive Strategy: Techniques for Analyzing Industries and Competitors,
Free Press, New York.
Rugman, A. and S. Girod (2003). Retail Multinationals and globalization: The evidence is regional,
European Management Journal, 21, 24-37
Ryans, J. K., and Shanklin, W. L. (1980), ‘How Managers Cope with Terrorism,’ California
Management Review, 23, 66-72
Sheffi, Y. (2001). Supply chain management under the threat of international terrorism. Massachusetts
Institute of Technology Press, US
Simon, J. D. (1994). The Terrorist Trap. Bloomington: Indiana University Press.
Trkman, P. and McComach (2009). Supply-chain risk in turbulent environments. A conceptual model
for managing supply-chain network risk. International Journal of Production Econonmics.
119(2) 247-258
Victoroff, J. (2005). The Mind of the terrorist: A review and critique of psychological approaches.
Journal of Conflict resolution, 9, 3-47
Wasswa, D. O (2015). ‘Nigerian Stock Market Loses N3.255trn Only In 12 Months’. Naij
News Online. Retrieved 13/02/2016 from https://www.naij.com/600354-nigerian-stock-
market-loses-n3-255trn-12-months.html