conf paper_

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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.

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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.

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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.

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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-

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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

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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

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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).

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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).

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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

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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%

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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.

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Given that:









β = Factor Loading

4. RESULTS

Fig. 4.





industries.

AVIATION22%

TELECOMS20%

BANKING58%

Industry

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Given that:









β = Factor Loading

4. RESULTS

Fig. 4.





industries.

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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

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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


Fig 5.


Table 6.Rotated Component Matrixa

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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.


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

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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

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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)


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.

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