Title: Board Composition On Profitability Of Manufacturing Companies, Bossaso, Somalia.
Authors: Mohamed Aden Hassan, Abdinur Ali Abdullahi, Abdirahman Ali Mohamed and Mustafe Mahamoud Abdillahi PhD (c)
Volume: 9
Issue: 10
Pages: 229-238
Publication Date: 2025/10/28
Abstract:
This study empirically investigated the impact of board composition on the profitability of manufacturing companies in Bossaso, Somalia. Grounded in an integrated theoretical framework of Agency, Resource Dependence, and Stewardship theories, the research tested the hypothesis that a significant relationship exists between these variables. A cross-sectional mixed-methods design was employed, collecting quantitative data through questionnaires from 132 respondents and qualitative insights from 12 interviews with managers and directors. The data were analyzed using descriptive statistics and linear regression. The findings revealed that board composition was perceived as fairly developed (Mean=3.19), with a strong emphasis on members' diverse expertise. Critically, the regression analysis demonstrated a strong, positive, and statistically significant relationship between board composition and profitability (r = .601, Rē = .361, p = .000). The study concluded that board composition is a substantial determinant of financial performance in this challenging context. However, the pathway to profitability was most strongly mediated through the lens of Resource Dependence Theory, indicating that boards functioned primarily as strategic assets for securing critical resources and navigating external dependencies, rather than merely fulfilling a monitoring role. The research validated a context-specific hierarchy of governance theories, providing a critical blueprint for enhancing corporate governance in post-conflict economies.