EFFECT OF INTERNAL ENVIRONMENT ON ORGANIZATIONAL PERFORMANCE
(A STUDY OF SELECTED MANUFACTURING FIRMS IN ENUGU METROPOLIS)
ABSTRACT
This research work examined the Effect of internal environment on organizational performance. A study of selected manufacturing firms in Enugu Metropolis. The objectives of the study include to: ascertain the extent to which internal environment affects organisational performance of the selected manufacturing firms, investigate how organizational structure as an internal environmental factor affects profitability of the selected manufacturing firms, find out the relationship between organizational culture and productivity and examine the effect of organizational resources on sales turnover of the selected manufacturing firms. The major instrument of data collection was the questionnaire. The sources of data were the primary and secondary sources. The population of the study was 737 while the sample size of 259 was determined using the Taro Yamane’s formula. The data collected were presented in tables of frequencies and percentages using the five point likert scale. The hypotheses were tested using the chi-square distribution formula. The findings included that Internal environment affects organisational performance of the selected manufacturing firms in Enugu metropolis to a large extent, organizational structure as an internal environmental factor positively affects profitability of the selected manufacturing firms in Enugu metropolis, organizational culture has a significant relationship with productivity of the selected manufacturing firms in Enugu metropolis and organizational resources have a positive effect on sales turnover of the selected manufacturing firms in Enugu metropolis. The research concluded that internal environment has a significant effect on organizational performance and it was recommended that management of organizations should adopt and strengthen their internal environmental factors as it affects organizational performance to a large extent, management of organizations should adopt good organizational structure as it positively affects profitability of their organizations, strong organizational culture should also be adopted by management of organizations as it has a significant relationship with productivity and Management of organizations should also consider their resource as it has a positive effect on sales turnover.
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1     Background of the Study                        
1.2     Statement of the Problem                        
1.3     Objectives of the Study                         
1.4     Research Questions                            
1.5     Statement of Hypotheses                         
1.6     Significance of the Study                        
1.7    Scope of the Study                             
1.8    Operational definition of terms                    
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1    Conceptual Framework of the Study                
2.1.1 Concept of Internal Environment                
2.1.2 Organisational Performance/Productivity            
2.1.3 Concept of Sales Turnover                    
2.1.4 Concept of Organizational Structure                
2.1.5 Types of Organisational Structure                
2.1.6     Functional Structure                        
2.1.7 Organizational Structure and
Productivity/Performance                        
2.1.8 Concept of Organisational Culture                
2.1.9 Characteristics of Organisational Culture            
2.1.10 Types of Organizational Culture                
2.1.11 The Importance of Organizational Culture as an
  Internal Environmental Factor                
2.1.12 Effects of Organizational Culture on Worker's
 Productivity                                     
2.1.13 Concept of Profitability                         
2.1.14 Concept of Productivity                         
2.1.15 Concept of Organization Performance             
2.2     Theoretical Framework of the Study                
2.2.1 Person-Environment Fit Theory.                
2.2.2 Structural Functionalism Theory                
2.2.3 Contingency Theory                            
2.3    Empirical Review                              
2.3.1 Extent to Which Internal Environment
Affects Performance of Organizations            
2.3.2 Effect of Organizational Structure as an
Internal Environmental Factor on Profitability
of Organizations                            
2.3.3 The relationship between organizational culture
and productivity of organizations                   
2.3.4 The Effect of Organizational Resources on Sales
Turnover of Organization                        
2.4 Summary of Review of Related Literature            
2.5 Gap in the review of the related literature            
CHAPTER THREE
METHODOLOGY
3.1    Research Design                            
3.2    Sources of Data                            
3.2.1    Primary Sources                            
3.2.2 Secondary Sources                            
3.3    Area of the Study                            
3.4     Population of the Study                        
3.5    Sample Size Determination                     
3.6     Instruments for Data Collection                
3.7    Validity of the Instrument                     
3.8    Reliability of the Instrument                    
3.9     Method of Data Presentation and Analysis        
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.1    Data Presentation and Analysis                 
4.2    Bio-Data                                    
4.3     Data Relating To Research Questions            
4.3.1 Research Question One                            
4.3.2 Research Question Two                        
4.3.3 Research Question Three                        
4.3.4 Research Question Four                        
4.4    Test of Hypotheses                            
4.4.1 Test of Hypothesis One                        
4.4.2 Test of Hypothesis Two                        
4.4.3 Test of Hypothesis Three                        
4.4.4 Test of Hypothesis Four                        
4.5    Discussion of Findings                         
4.5.1 Discussion Based on Hypothesis One            
4.5.2: Discussion Based on Hypothesis Two            
4.5.3: Discussion Based on Hypothesis Three            
4.5.4: Discussion Based on Hypothesis Four            
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1    Summary of Findings                         
5.2     Conclusion                                 
5.3     Recommendations                             
5.4    Contribution to Knowledge                     
5.5     Suggestions for further Research                
List of References                             
Appendix                                    
Questionnaire                                
CHAPTER ONE
INTRODUCTION
1.1     Background of the Study
    Human beings and organizations are products of heredity and environment. Like a person’s heredity, an organization can do virtually nothing about its past history. But also like a human, an organization can do much about its environment. It can analyze it, predict it, attempt to change it in various ways, adapt to it, or leave it (or some major part of it). But before management can make a prudent decision to change, to adapt, or to leave, it must analyze the environment and assess its future (Gouri, 2015:95). Analyzing and predicting the environment directs attention not only to the situation as it is, but more importantly to the situation as it appears it will be. The progress of every business depends largely on its ability to become accustomed to environment. Thus, it can be identified that the association between business and its environment is very close and continuous. This association helps the business firm to reinforce its capabilities and allocate its resources more efficiently. In the words of (Jamal, 2016:103). Internal business environment is made up of variables or factors that organization has control over and can easily manipulate to suit its purpose as may be dictated by the prevailing circumstances such as capital, personnel, profit, procedure, policy, structure, objectives etc.
In a formal organization, interactions are rationally coordinated and directed through time on a continuous basis. Organizations can be perceived as a system composed of interrelated subsystems  (Nnamani and Ajagu, 2014). Okunola cited in Eruemegbe (2015) describes organization as an entity formed by or comprising a group of people with the aims and objective carrying out some specific functions or performance of responsibilities or the other. Similarly, Derek in Eruemegbe (2015) defines performance as the willingness of an individual to carry out the goals and objectives of an organization. Thus, the impact of any factor in an organization such as structure, resources culture, etc. should not be considered independently of others, although they exist under internal environment.
    The internal environment of a firm is rapidly emerging as a primary model of competitive advantage that explicitly focused on organizational effectiveness (Eisenhardt and Martin, 2000); and as a strategic tool of the highest order in terms of firm management (Lopez, 2005). Wu (2005) states that for firms facing a rapidly changing environment, the strengthen of their dynamic capabilities is a key concern. These dynamic capabilities have been defined as the firm’s ability to innovatively reconfigure its recourses (Wu, 2005). Resources is a component of internal environment, which the manager should turn into competitive edge in order to achieve organizational performance.
        Internal environment is a prominent factor in determining the growth and development of an organisation. Nevertheless, there is no precise definition, nor a rigid methodology in measuring the enormity of internal environments. When competing with others firms, the strategy needs to be in place which essentially deals with the internal environment. The estimation of the right amount of internal resources in the internal environment is needed to take up a project or else the project may result in undesired consequences. Internal environment also includes culture and other intangible aspects like teamwork, coordination, efficiency level of employees, employee’s salaries and monitoring costs. The strategy for competition should also be in synergy with the internal resources especially the internal environment (Govindarajulu, 2004).
    Consequently, managers of organisations must identify those factors that make up their internal environment in order to enhance organisational performance. This is achievable by focusing on the aspects of internal environment that has the ability of affecting organizational performance, such as organisational culture, organisational structure and organizational resource. The resource-based view of the firm suggests that resources that are valuable, rare, unique and inimitable should lead to competitive advantage, thereby enhancing organizational performance (Roeloelofson, 2002). Hence, this research work wants to examine the effects of internal environment on organizational performance with selected manufacturing firms in Enugu Metropolis as a case study.
1.2 Statement of the Problem
Business firms or organizations in general do not operate in a vacuum. Instead, they constantly find themselves in a virtual whirlwind of problems and controversies. Many of the managers are buffeted by many complex complicated and threatening components of the environment in which their organizations do business. The force is often internal or external.
However, variables like structure, culture and resources (which capture the totality of the internal environment) are within the immediate control of the organisation.  Seemingly, many manufacturing firms do not consciously and strategically align these variables (internal environmental variables of structure, culture and resources) to address the opportunities/threats presented by the environment in their drive for performance, and this forms the bane (worry) upon which this investigation was anchored.
1.3    Objectives of the Study
The general objective of this study is to identify the effect of internal environment on organizational performance. The specific objectives include:
(1)    To ascertain the extent to which internal environment affects organisational performance of the selected manufacturing firms in Enugu metropolis.
(2)    To investigate how organizational structure as an internal environmental factor affects profitability of the selected manufacturing firms in Enugu metropolis.  
(3)    To find out the relationship between organizational culture and productivity of the selected manufacturing firms in Enugu metropolis.
(4)    To examine the effect of organizational resources on sales turnover of the selected manufacturing firms in Enugu metropolis.   
1.4 Research Questions
Based on the objectives of the study, the following research questions were raised:
(1)    To what extent does internal environment affects organisational performance of the selected manufacturing firms in Enugu metropolis?
(2)    How does organizational structure as an internal environmental factor affects profitability of the selected manufacturing firms in Enugu metropolis?  
(3)    What is the relationship between organizational culture and productivity of the selected manufacturing firms in Enugu metropolis?
(4)    What is the effect of organizational resources on sales turnover of the selected manufacturing firms in Enugu metropolis?   
1.5    Statement of Hypotheses
The following hypotheses are formulated to guide this study:
Hypothesis One
H1:     Internal environment affects organisational performance of the selected manufacturing firms in Enugu metropolis to a large extent.
Hypothesis Two
H1:    Organizational structure as an internal environmental factor positively affects profitability of the selected manufacturing firms in Enugu metropolis.
Hypothesis Three
H1:     Organizational culture has a significant relationship with productivity of the selected manufacturing firms in Enugu metropolis.
Hypothesis Four
H1:     Organizational resources has a positive effect on sales turnover of the selected manufacturing firms in Enugu metropolis.   
1.6    Significance of the Study
This study shall be of great benefit to business organisations and chief executives in both private and public companies. Managers of business organisations will appreciate the relevance of their internal environment in making management decisions. It shall provide a guide to the chief executives on how to use the internal environmental factors in motivating their workforce and this increasing productivity.
The study shall also be of great benefit to the academia as it shall be a reference material to scholars and students who may wish to research on similar topics. Finally, the study shall be of great importance to the research as more knowledge will be acquired in the process and will make room for further studies.
1.7    Scope of the Study
The study focused on effect of internal environment on organizational performance in selected manufacturing firms in Enugu Metropolis. The geographical location of these companies is in Enugu East and the firms are Innoson Technical and Industrial Ltd, Hardis and Dromedas and Juhel Pharmaceuticals Nigeria Ltd. The period covered is between 2010-2017.
1.8 Limitations of the Study
The researcher encountered an impediment in the course of carrying out this research work.  This includes the uncooperative attitude of the respondents.
Uncooperative Attitude of Respondents: The respondents of the selected manufacturing firms in Enugu Metropolis were economical with information, but when they confirmed that the research was purely for academic purpose, they gave out useful information necessary for the research work.
1.9 Definition of Terms
The following are the definition concept used in this work
Organisational culture: Organisational culture is the collection of traditions, values, beliefs, policies, and attitudes that constitute a pervasive context for everything one does and drinks in an organisation
Organisational Human Resources: Human resources are the set of individuals who make up the workforce of an organization, business sector, or economy. “Human capital” is sometimes used synonymously with human resources, although human capital typically refers to a narrow view. (i.e the knowledge the individuals embody and can contribute to an organization).
Internal Environment: The internal environment consists of the inherent competencies of the firm and the structure of its internal systems and processes. It is therefore imperative for the organization to conduct regular assessments of their internal systems and processes.
Organisational Structure: Organisational structure is the formal system of task and reporting relationship that controls, coordinates and motivates employees so that they cooperate to achieve an organisations goal.
Organisational Performance: Organizations performance is the quality of resources at all levels of the organisation with respect to the attainment of organisational goals.