Cost Control and Growth of Listed Manufacturing Firms in Ghana: the Moderating Role of Pricing Strategy

Abstract

ABSTRACT Growth in the manufacturing sector of Ghana has been sluggish due to the recent hikes in input prices. However, manufacturing firms’ growth, mainly, depends on their ability to maximize and sustain profit. Hence, many of these manufacturing firms may attempt to achieve this objective through the management of their cost structure and the adaptation of better pricing methods. Therefore, this study determined the effect of cost control on the growth of manufacturing firms in Ghana being moderated by pricing strategy. In achieving this, Levene’s test and two-step system dynamic General Method of Moments (GMM) model were used to analyse the panel data for a period of 10 years from 2012 to 2021. The study revealed no statistically significant difference in the level of cost control of listed manufacturing firms in Ghana. Additionally, the findings from the regression analysis indicated that cost control dimensions have statistically significant relationship with firm growth. Even though the competitive-based pricing strategy and customer-value based pricing strategy were weak in influencing cost control dimensions to affect firm growth, cost-based pricing strategy had statistically strong interaction effect on cost control (dimensions) and firm growth. The study concluded that pricing strategy significantly moderate cost control and firm growth (proxied as changes in total sales) and not return on equity as a proxy for firm growth. It was therefore recommended that management of manufacturing firms’ policies should be channelled to controlling cost and eliminating wastage in all dimensions. The study also recommended that manufacturing firms’ management must focus on cost-based pricing strategy to enable cost control to highly influence firm growth in the Ghanaian manufacturing industry.