Large, domestically owned and headquartered firms have been catalysts of structural transformation in several East Asian late-industrialisers. This article investigates why Nigeria’s largest domestically owned industrial conglomerates, most notably the Dangote Group, have failed to catalyse similar broad-based industrial transformation, despite their scale and entrepreneurial success. We show that such firms in Nigeria have produced limited spillovers and substantial negative effects on the wider industrial ecosystem. Theoretically, the article mobilises Myrdal’s concept of backwash and spread effects to reframe diversified business groups (DBGs) as ecosystem coordinators whose developmental role must be assessed through these effects. It shows that in Nigeria, backwash effects, stemming from market concentration, predatory behaviour, and regulatory capture, have systematically outweighed spread effects such as capability development and supplier upgrading. The findings advance the study of African capitalism by conceptualising how large firms can simultaneously stimulate and stifle industrial ecosystems, depending on the political and institutional mediation of scale. The article concludes that effective industrial policy must address not only capability failures in firms, but also the structural power of dominant conglomerates and the ecosystem-wide tensions produced by scale.
Itaman et al. (Tue,) studied this question.