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Chapter One: Introduction
Nigeria, as one of the most densely populated nations in Africa and a prominent participant in the continent’s economic landscape, has always aimed to transition its economy into a robust force driven by industrialization and prominence in the service sectors. The achievement of this ambitious objective relies on the presence of a flourishing small and medium-sized firm (SME) sector, which not only makes a substantial contribution to economic expansion but also nurtures innovation, generates employment opportunities, and enhances the country’s international competitiveness (Etim et al., 2017). The primary focus of this dissertation is exploring the impact of entrepreneurship practices on the performance of small and medium-sized firms in Nigeria. It involves a comprehensive investigation into how entrepreneurship practices contribute to these businesses’ success in Nigeria’s efforts to develop an industrial and service-oriented economy.
As revealed in the following chapters, entrepreneurship is a key driver of economic development, and in the context of Nigeria, SMEs play a crucial role in the country’s economic landscape. For instance, the literature review explores the existing body of literature that examines the complex connection and the performances of SMEs in Nigeria. Therefore, the paper has laid a groundwork for understanding the current state of knowledge in this field, identifying the major themes, and pinpointing areas that require further investigation. It is essential to understand the factors that influence the success and sustainability of SMEs since the country is at a crucial stage in its economic development. Such information may help in the understanding of the effects of the performance of the SMEs in Nigeria.
The Nigerian government’s focus on economic diversification and reducing reliance on oil revenues has highlighted the significant role of the small and medium-sized enterprise (SME) sector in driving this transformative process. As outlined in several national policy documents, promoting an “industrial and service-driven economy” is crucial to Nigeria’s economic recovery and growth strategy. The Nigerian government has implemented numerous policies and initiatives to support the growth and development of small and medium-sized enterprises (SMEs), particularly emphasizing moving towards an economy based on industrialization and services (Kritikos, 2014). The National Industrial Revolution Plan (NIRP), which was initiated in 2014, seeks to expedite the process of industrialization in Nigeria through the facilitation of domestic manufacturing and the enhancement of value-added activities. Promoting small and medium-sized enterprises (SMEs) aims to foster their significant contribution to economic growth by enhancing productivity and competitiveness (Chete et al., 2014).
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) oversees the National Enterprise Development Programme (NEDEP), an initiative that aims to improve the capabilities and competitiveness of small and medium-sized enterprises (Mustapha, n.d). The program aids in various domains, including facilitating access to financial resources, enhancing skills, and establishing connections with relevant markets. The Youth Entrepreneurship Support (YES) Programme was developed to empower young entrepreneurs. This initiative offers training, mentorship, and financial access to start-ups and small and medium-sized enterprises (SMEs) managed by youth (Mwanja, 2023). The government aims to stimulate innovation and facilitate employment development by cultivating youthful talent (Bank, 2019).
Undeniably, entrepreneurial skills and competencies are fundamental in ensuring the growth and success of SMEs in Nigeria. Eunice, (2018) offers insightful evidences about the crucial role that entrepreneurial skills play in shaping the trajectory of SMEs in the country. One of the key findings is the central importance of skills such as creativity, risk-taking, and innovation in achieving business within the Nigerian context. The study done by Ogundana et al., (2018) adds depth to the understanding of how entrepreneurship skills impact SME growth, particularly in a niche context. Specifically, the research focused on women-owned sewing business in Lagos State, Nigeria, identifying technical skills, managerial skills and innovation capabilities as pivotal in the growth of women owned enterprises. Moreover, the alignment of Ogundana et al (2018) findings with the perception that Nigerian entrepreneurs recognize the critical role of skill development reinforces the importance of skill acquisition and enhancement as a strategic imperative for SMEs in the country.
Within the context of governmental policies and the broader agenda of economic transformation, this research aims to thoroughly investigate the impact of entrepreneurial practices on the performance of small and medium-sized enterprises (SMEs) in Nigeria. This study assesses the alignment between these practices, the government’s vision of an industrial and service-driven economy, and their potential contribution to the desired economic diversification and growth. This research aims to gain insight into the intricate relationship between entrepreneurial practices, government policies, and the performance results of Nigeria’s small and medium-sized enterprises (SMEs) by conducting empirical research and thorough analysis. In the forthcoming chapters, this paper will thoroughly explore the domains of entrepreneurship theory, empirical research, and business leaders’ real-life encounters to comprehend this pivotal intersection. The primary objective of this study is to provide significant contributions in terms of knowledge that can be utilised to shape policies, direct business strategies, and advance Nigeria’s progress toward becoming an industrial and service-oriented economy. This analysis focuses on small and medium-sized enterprises (SMEs), which are crucial in driving economic change.
Gender dynamics may have profound impacts on Nigeria’s entrepreneurial landscape, leading to opportunities and challenges that may be faced by the entrepreneurs. Okolie et al., (2021) offers critical insights into the role of gender in entrepreneurship, with a specific focus on women entrepreneurs engaged in Igbo women’s basket-weaving enterprises. The authors highlight the socio-cultural and economic context in which these enterprises operate, revealing how entrepreneurship practices can be a potent tool for poverty alleviation among women in Nigeria. Also, it is essential to recognize the potential of women’s entrepreneurship in poverty elimination so as to support gender sensitive policies and support systems in Nigeria. It is also essential for the Nigerian business leaders, policymakers, and civil society organizations to collaborate in creating an enabling environment for women entrepreneurs. Consequently, this helps in addressing gender based violence and promoting female representation in leadership and decision-making roles. Okolie et al. (2021) demonstrates that entrepreneurship can be a powerful means of poverty alleviation among women, emphasizing the importance of gender-inclusive policies and support systems. Moreover, the persistence of gender disparities in access to resources and opportunities, underscores the need for legal reforms and policy interventions to remove structural barriers.
SMEs have powerful catalysts which include the entrepreneurial activities such as strategic, innovative, and managerial actions. Notwithstanding, it is almost impossible to understand the effects of the SMEs without navigating how these activities are expressed in the country and their influence on various aspects of the SMEs performance. For this reason, the essay follows a systematic structure while examining the theoretical principles that form the basis for the link between entrepreneurial practices and SME performance. This includes exploring the influential theories like the resource-based view (RBV), dynamic capabilities and the entrepreneurial orientation framework.
The dissertation delves into the empirical research on Nigeria’s entrepreneurship practices and SME performance. This examination encompasses qualitative studies that offer insights into the various methodologies used to explore this connection. Some of the key factors explored include the effects of innovation, market orientation, access to funding, networking and the influence of entrepreneurship education on SME performance.
Since the entrepreneurial practices in SMEs are diverse and dynamic they reflect the evolving nature of business in a globalized world. According to Shahid et al., (2023) the frugal innovation in sustainable entrepreneurship has a transformative potential. This may be because, frugal innovation is characterized by the focus on simplicity and cost effectiveness and hence it emerges as a source of fostering sustainable entrepreneurship. The authors emphasize that entrepreneurship rooted in frugal innovation can lead to positive social outcomes including female empowerment, improved quality of life, and enhanced access to affordable healthcare for low-income customers.
Leliveld & Knorringa (2018) concurs with this perspective by emphasizing on the importance of frugal innovations in development research. They suggest the usage of bottom-up approaches, drawing attention to grassroots innovation, bricolage and livelihood strategies. As such, this perspective aligns with the challenges faced by the SMEs in developing the Nigerian economy, where resource constraints and unique contextual factors necessitates innovative and adaptive practices for sustainable growth. From this perspective the dissertation suggests the application of entrepreneurial strategies within he SMEs in Nigeria. Based on Ifekwem & Adedamola, (2016), and Gamage et al., (2020), aspects such as innovation, strategic management, networking and marketing are essential for the survival and growth of SMEs in Nigeria. However, there is a significant variance between firms regarding their level of adoption depending on factors like size, industry sector, or access to resources.
References
Bank, D. (2019, April 18). Youth Entrepreneurship and Innovation Multi-Donor Trust Fund. African Development Bank Group – Making a Difference. https://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/jobs-for-youth-in-africa/the-youth-entrepreneurship-and-innovation-multi-donor-trust-fund
Chete, L. N., Adeoti, J. O., Adeyinka, F. M., & Ogundele, O. (2014). Industrial development and growth in Nigeria: Lessons and challenges. https://www.brookings.edu/wp-content/uploads/2016/07/L2C_WP8_Chete-et-al-1.pdf
Etim, J., Adabu, M., & Ayam Ogar, C. (2017). Licensed under Creative Common INFLUENCE OF ENTREPRENEURIAL ORIENTATION AS SURVIVAL STRATEGY FOR SMALL AND MEDIUM ENTERPRISES: THE NIGERIA EXPERIENCE. International Journal of Economics, Commerce and Management United Kingdom, 8. https://ijecm.co.uk/wp-content/uploads/2017/08/5827.pdf
Eunice Abdul, O. (2018). Entrepreneurial skills and growth of Small and Medium Enterprise (SMEs): A comparative analysis of Nigerian entrepreneurs and Minority entrepreneurs in the UK. https://mpra.ub.uni-muenchen.de/86751/
Gamage, N., Ekanayake, E., GaknjAbeyrathne, Rpir Prasanna, J.M.S.B. Jayasundara, & Prasanna Sisira Kumara Rajapakshe. (2020). A Review of Global Challenges and Survival Strategies of Small and Medium Enterprises (SMEs). Economies, 8(4), 79–79. https://doi.org/10.3390/economies8040079
Ifekwem, N., & Adedamola, O. (2016). Survival Strategies and Sustainability of Small and Medium Enterprises in the Oshodi-Isolo Local Government Area of Lagos State. Acta Universitatis Sapientiae, Economics and Business, 4(1), 103–118. https://doi.org/10.1515/auseb-2016-0006
Kritikos, A. S. (2014). Entrepreneurs and their impact on jobs and economic growth. IZA World of Labor. https://doi.org/10.15185/izawol.8
Leliveld, A., & Knorringa, P. (2018). Frugal innovation and development research. The European Journal of Development Research, 30, 1-16. https://link.springer.com/article/10.1057/s41287-017-0121-4
Mustapha, B. A. D. A. M. A. S. I. ENTREPRENEURIAL ORIENTATION AND PERFORMANCE OF SMES: THE MODERATING EFFECT OF ENTREPRENEURIAL ECOSYSTEM. https://nigerianjournalofmanagementsciences.com/wp-content/uploads/2023/12/7.-ENTREPRENEURIAL-ORIENTATION-AND-PERFORMANCE-OF-SMES-THE-MODERATING-EFFECT-OF-ENTREPRENEURIAL-ECOSYSTEM.pdf
Mwanja. (2023). Nigerian Youth Entrepreneurship Support Programme (YES-P) | Opportunities for Youth. Opportunitiesforyouth.org. https://opportunitiesforyouth.org/2023/04/nigerian-youth-entrepreneurship-support-programme-yes-p/
Ogundana, O., Galanakis, K., Simba, A., & Oxborrow, L. (2018). Factors influencing the business growth of women-owned sewing businesses in Lagos-State, Nigeria: a pilot study. Organisational Studies and Innovation Review, 4(2), 25-36. https://irep.ntu.ac.uk/id/eprint/38367/
Okolie, U. C., Ehiobuche, C., Igwe, P. A., Agha-Okoro, M. A., & Onwe, C. C. (2021). Women entrepreneurship and poverty alleviation: Understanding the economic and socio-cultural context of the Igbo women’s basket weaving enterprise in Nigeria. Journal of African Business, 22(4), 448-467. https://doi.org/10.1080/15228916.2021.1874781
Shahid, M. S., Hossain, M., Shahid, S., & Anwar, T. (2023). Frugal innovation as a source of sustainable entrepreneurship to tackle social and environmental challenges. Journal of Cleaner Production, 406, 137050. https://doi.org/10.1016/j.jclepro.2023.137050
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