EFFECT OF ENVIRONMENTAL FACTORS ON SMALL SCALE BUSINESSES PERFORMANCE

(A CASE STUDY OF KANO AND SOKOTO STATES)

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Author

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Department of Business Administration and Management

135 Pages 11,727 Words 1,717 Views PDF Format No. of Chapters: 1 to 5 Chapters

ABSTRACT

This is survey study carried out to investigate the SSBs performance and examine the

impact of environmental factors on SSBs performance in Kano and Sokoto states.

Questionnaire methods were mainly used to collect data from the sampled SSBs. The

data was analyzed using multivaried discriminant analysis and multiple regression

technique in order to assess the level of performance as well as establish the

significance of the relationship. The findings of this study clearly show that SSBs record

low performance within the period studied and environmental factors have significant

impact on their performance in Kano and Sokoto states. The study recommends that

government should create enabling environment for both existing and potential

investors in the sector, through provision of adequate infrastructures, financial support

and formulation of policies favorable to SSBs.

TABLE OF CONTENTS

Title Page - - - - - - - - - i

Declaration - - - - - - - - - iii

Certification - - - - - - - - - iv

Acknowledgement - - - - - - - - v

Dedication - - - - - - - - - vi

Abstract - - - - - - - - - vii

Table of Contents - - - - - - - - viii

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study - - - - - 1

1.2 Statement of the Problem - - - - - - 5

1.3 Research Questions - - - - - - - 6

1.4 Objectives of the Study - - - - - - 7

1.5 Research Hypotheses - - - - - - - 7

1.6 Significance of the Study - - - - - - 8

1.7 Scope of the Study - - - - - - - 9

1.8 Limitations of the study - - - - - - 10

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction - - - - - - - - 12

2.2 Concept of Small Scale Business - - - - - 12

2.3 The Importance of SSBs - - - - - - 13

2.4 Problems and Challenges of SSBs in Nigeria - - - 17

2.5 Concept of Business Performance - - - - - 18

2.6 Business and its Environment- - - - - - 19

2.7 Approaches to Studies on Business Performance - - - 21

2.8 Determinants of Business Performance - - - - 24

2.9 Business Performance Measurement- - - - - 26

2.10 Environmental Factors and Business Performance - - - 30

2.11 Theoretical Framework - - - - - - 38

2.12 The gap in the literature - - - - - - 42

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction - - - - - - - - 43

3.2 Research Design - - - - - - - 43

3.3 Population of the Study - - - - - - 44

3.4 Sample and Sampling Techniques - - - - - 45

3.5 Sources of Data - - - - - - - 47

3.5.1 Research Instruments for Data Collection - - - - 47

3.5.2 Validity and Reliability of Instrument - - - - 48

3.6 Methods of Data Analysis - - - - - - 49

3.6.1 Variables Definition - - - - - - - 52

3.6.2 Variables Measurement - - - - - - 53

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction - - - - - - - - 54

4.2 Data Analysis, Hypotheses Testing and Discussion of Findings - 54

4.2.1 Descriptive Analysis - - - - - - - 55

4.2.2 Analysis of the Result of Statistical Testing - - - - 57

4.3 Research Findings - - - - - - - 73

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary - - - - - - - - 74

5.2 Conclusions - - - - - - - - 76

5.3 Recommendations - - - - - - - 77

5.4 Suggestions for Further Studies - - - - - 79

References - - - - - - - - 81

Appendices - - - - - - - - 101

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study

Small scale businesses (SSBs) constitute large population of businesses worldwide and

they play a significant role in the economy. Consequently, the performance of small

scale enterprises sub-sector is closely associated with the performance of the nation.

SSBs play very important role towards fostering accelerated economic growth,

development and stability within several economies. They play tremendous roles in

employment generation, provision of goods and services, creating better standard of

living, as well as contributing to the growth of Gross Domestic Product (GDP) of the

nation, (OECD, 2000). Small firms create new jobs, open up opportunities for upward

social mobility, foster economic flexibility, and contribute to competition and economic

efficiency (Liao, Welsch, & Moutray, 2009). SSBs are the driving force for economic

growth, job creation, and poverty reduction in developing countries. They have been the

means through which accelerated economic growth and rapid industrialization have

been achieved. Furthermore SSBs has been recognized as a feeder service to large- scale

industries (Fabayo, 2009).

Studies have indicated that SSBs provide an effective means of stimulating indigenous

enterprises, enhancing greater employment opportunities per unit of capital invested and

aiding the development of local technology (Sule, 1986; and World Bank, 1995). SSBs

help in mobilizing surplus income and resources through savings for investment. In

similar vein they also encourage, as well as, promote the use of local raw materials.

Their nationwide spread contributes to a more equitable income distribution among

individuals and regions, as well as mitigating rural-urban migration. They also enhance

the strengthening of industrial linkages and the integration of industry with other sectors of the economy via production of intermediate products such as raw materials and spare

parts.

In Nigeria, for instance the recent survey of formal sector of small and medium

enterprises by National Bureau of Statistics (NBS) and Small and Medium Scale

Enterprises Development Agency (SMEDAN) reveals that 92.8 per cent of the

enterprises are small scale while 7.22% are medium scale enterprises, (NBS/SMEDAN,

2012). Small scale businesses represent about 90% of the industrial sector in terms of

the number of enterprises; they also account for 70% of national industrial employment

if the threshold is set at 10 – 50 employees, and contribute 10% of manufacturing output

in Nigeria (Ajayi, 2002). Anwatu (2006) opined that 75% of the private sector in

Nigeria is dominated by small scale enterprises reiterating that Organized Private Sector

(OPS) is the engine of growth and creator of wealth and employment. The Nigeria

Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), (2006) argued

that Small businesses are the vehicle for rapid industrialization and development of any

nation. Eke (2007) argued that small businesses account for over 93 % of the total

entrepreneurs in Nigeria.

However, despite the number of SSBs and assistance given to them by government and

other agencies toward sustainable economic development, the performance of the sector

still fall below expectation in Nigeria, (Basil, 2005 & Abiodun, 2011). This may be

because the sub-sector has been bedeviled by several environmental factors militating

against its performance. Thus, this study assess the performance of SSBs in Kano and

Sokoto from 2005 to 2012, and also examine the extent to which the major

environmental factors (internal and external) impacted on the performance of SSBs in

the two states using profit, sales (revenue) and employment (number of employees) as

performance indicators.

Business performance refers to the firmâ€Ÿs success in the market, which may have

different outcomes (Lebas & Euske, 2002). Therefore, strategically business

performance is often referred to as firm success or failure. Business performance is a

focal phenomenon in business studies. Therefore looking at the firm as a complex

organization seeking to survive or thrive in its competitive environment, performance

evaluation and measurement systems serve as a key contributor to the perceptual and

coordination/control capabilities of the firm. Firms evaluate their performance to help

monitor and control specific activities; to predict future internal and external states; to

monitor state and behavior relative to its goals; to make decisions within needed time

frames; and to alter the firmâ€Ÿs overall orientation and/or behavior. Firm performance

measurement has been described in terms of the extent to which a firmâ€Ÿs economic and

strategic objectives are achieved in the market place. Since essentially all firms

regularly set and refine strategic and economic goals for their pursuits, high

performance is the function of the degree to which the firm has achieved its goals.

Accurate business performance evaluation is a key to success for enterprises. As such

the research in the area of SSBs performance assessment is necessary for the success of

SSBs in developing countries like Nigeria.

A business organization could measure its performance using the financial and non-

financial measures. Recognizing the limitations of relying solely on either the financial

or non-financial measures, owner-managers of the modern SSBs have adopted a hybrid

approach of using both the financial and non-financial measures. The selection of

performance measures that reflect the true situation of small and medium businesses

with some degree of certainty and reliability is indeed a crucial process. The lack of

universally accepted standard performance measures left the door open to business

organizations to decide and choose their own performance measure. As such this study

135 Pages 11,727 Words 1,717 Views PDF Format No. of Chapters: 1 to 5 Chapters

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