An Empirical Investigation into Impact of Business Model on Performance for SMEs in Nigeria

Abstract

Understanding the concept of business model is a very important factor for a firm’s performance. This study examines the relationship between business model and performance of SMEs in Nigeria. In spite of increased interest of citizens going into small business, it has indicated that most of businesses end up with poor performance which is as a result of varied attitudes towards business model. Business model was conceptualized using efficiency centered business model design and novelty centered business model design, while performance for the dependent variable was conceptualized using sales growth, return on sales and total factor productivity. With the use of questionnaire survey, business owners of small and medium enterprises operating in Abuja Nigeria were administrated. The aim of this research is to find out to what extent and how SMEs use frameworks for creating and innovating their business models and what the effectiveness of this process is. The relevant issues discussed are, how do SMEs make use of business models and who are involved in the business model process in improving performance. This paper aims to give the state of the art of the business model innovation researches on SMEs. Overall, this article makes three contributions: 1) to enrich the current research on the topic of business model on small medium enterprises, 2) to analyze the researches on the field of the information on the methodology used and the unit analysis of the researches, and 3) to provide future research directions of the business model research, especially in the context of the small medium enterprises.