CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Small and medium enterprises (SMEs) are the backbone of contemporary economic development because of the critical role they play in ensuring the global economy’s long-term viability (Carter and Tamayo, 2017; Wattana pruttipaisan, 2002). Small and medium-sized enterprises (SMEs) account for more than 90% of firms, more than 50% of employment, and more than 50% of global GDP (Kessey, 2014). SMEs are the most common business entities in Africa. Enterprises contribute considerably to the creation of jobs, capital formation, economic viability, and poverty reduction, among other things (Ganyaupfu, 2013). SMEs are seen as the mechanism for achieving growth and excellence in Africa’s rising economy today (Roldan, 2015). The industry generates a lot of jobs and helps the economy flourish. In Ghana, for example, According to Ganyaupfu (2013), SMEs account for 91 percent of all registered business organizations in South Africa, accounting for 52 to 57 percent of the country’s GDP. However, in Nigeria, a slew of issues have engulfed the country’s economic environment, making doing business tough and leading to the country’s SMEs failing at an alarming rate. According to studies, 85 percent of businesses in the United States fail during the first five years of operation (Ogboru, 2005; Olu and Haynes, 2006; Ariyo, 2008). Furthermore, even the small number of SMEs that survive beyond five years disintegrate between the sixth and tenth years of their existence, leaving just about 5 to 10% of SMEs in operation (Onugu, 2005).
Entrepreneurial competence is one of the most important determinants of corporate success, performance, and growth, as well as failure (Kiggundu, 2002; Brinckmann, 2008; Mitchelmore and Rowley, 2013). Furthermore, female entrepreneurs typically run small-scale firms that rely heavily on the owner’s abilities. As a result, it’s critical to comprehend the nature of such skills in the context of female entrepreneurs (Mitchelmore and Rowley, 2010; Mitchelmore et al. 2008).
Entrepreneurial competencies are a collection of knowledge, behaviors, skills, and abilities that distinguish great from ordinary or poor entrepreneurial performance (Wu, 2011; Athey and Orth, 1999). Similarly, Man, Lau, and Chan (2002) see entrepreneurial abilities as a collection of high-level attributes that encompass knowledge, creativity, and leadership. Entrepreneurial skills enable businesses to gain a long-term competitive edge, which finally leads to corporate success and growth (Man et al., 2002). Tehseen and Ramayah (2015) emphasized the need of understanding the significance of entrepreneurial competences, particularly in emerging economies, because entrepreneurs’ competencies are critical for the survival, performance, and success of businesses. Entrepreneurial competencies, on the other hand, are measured differently based on the context, prediction, and assumption (Mitchelmore and Rowley, 2010). As a result, according to numerous scholars, the leading competencies-related obstacles that result in poor performance and failure of businesses in Nigeria are a lack of or ineffective innovation, unfavorable marketing strategies, and a lack of distinctive entrepreneurial traits (Duru, 2011; Eneh, 2010; Onugu, 2005; Adeoti, and Adeoti, 2005; Adeoti, and Adeoti, 2005; Adeoti, and Adeot
STATEMENT OF PROBLEM
Despite the fact that SME’s are present in every sector of the economy, they are most prevalent in trade (54 percent), followed by services (34 percent ). Micro and small businesses are vital to people’s livelihoods as well as the country’s overall economy and advancement. They produce jobs for relatively little money per job; they use and add value to local resources; they promote equitable income distribution; and they are better positioned to address local demands in small markets. Even for persons with minimal knowledge and expertise, the technologies they utilize are easier to acquire, transfer, and use. Through partnerships and subcontracting ties, they have the ability to complement large firms. Micro and small businesses can also be used as a teaching ground for entrepreneurship and management (Olomi, 2006). SME’s are finding it challenging to capitalize on existing opportunities for more employment and wealth development due to a slew of issues. The entrepreneur’s competency, in terms of attitudes, motivation, exposure, skills, and experiences, is one of the most important hurdles. Other issues, such as a burdensome legal structure, limited access to capital, and limited working space, compound this capacity bottleneck. Simultaneously, entrepreneurship development is undeveloped and not widely available or inexpensive to small and medium-sized businesses.
OBJECTIVES OF THE STUDY
The primary goal of this research is to determine the impact of entrepreneurial skills on the success of small businesses in Nigeria. More specifically, the study aims to:
1. Determine how capable entrepreneurs are in terms of knowledge and experience.
2. Examine the impact of entrepreneurial skills on the success of Nigerian SMEs.
3. Investigate the issues that SMEs face in Nigeria.
RESEARCH QUESTIONS
1. In terms of skills and experience, how competent are Nigerian entrepreneurs?
2. Is there any evidence that entrepreneurial skills have a substantial impact on the success of SMEs in Nigeria?
3. What are the SMEs’ problems in Nigeria?
RESEARCH HYPOTHESIS
Ho: There is no evidence that entrepreneurial skills have a substantial impact on the development of SMEs in Nigeria.
Hello, entrepreneurial skills have a big impact on the development of SMEs in Nigeria.
SIGNIFICANCE OF THE STUDY
The study’s goal is to determine the extent to which entrepreneurial characteristics contribute to business success. The study aims to identify the obstacles and prevailing causes preventing SMEs from succeeding, assess them, and then give relevant recommendations to address them.
The study’s findings are valuable to SME owners because they emphasize the importance of sufficient training for improving effectiveness in managing SME activities and policy implications. The study’s findings will be used as a starting point for future research.
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