Small And Medium Scale Enterprises Research Articles

Commercial Bank Loans and the Performance of Small and Medium Scale Enterprises (SMEs) In Nigeria

The contributions of Small and Medium Scale Enterprises (SMEs) to the growth of Nigerian economy cannot be understated as they seem to drive the economic and industrial transformation of the country. Notwithstanding the acknowledged role of SMEs, a number of factors tend to limit their growth potentials. They’re still faced with the issue of funding and to overcome this problem, external borrowing has become inevitable. Commercial banks appear to be the most likely source of funds. Thus, the main objective of this study is to ascertain the impact of commercial bank loans on the performance of small and medium scale enterprises in Nigeria. While an ex-post facto research design was adopted in the investigation; a least square regression analysis was carried out on a time-series data to ascertain relationships, and to avert the emergence of spurious results, unit root tests were conducted. Outcome of the study indicates that, there exists an inverse relationship (though not statistically significant) between the amount of commercial bank loans (CBLSME) made available to SMEs and the output of SMEs (OPSME) in Nigeria This implies that as CBLSME increases, OPSME decreases. The negative sign exhibited by OPSME is not in line with our apriori expectation because an increase in CBLSME is supposed to cause an increase in investment which is expected to boost the output of SMEs. This trend has shown the poor attitude of commercial banks towards the granting of loans to SMEs in Nigeria. The study also revealed that a seeming upsurge in the activities of SMEs may not have reduced the rate of unemployment in Nigeria as a good number of people employed by the SMEs are probably under-employed. Conclusively, the inability of our commercial banks to grant effective loans to SMEs have translated to low level of output of SMEs to GDP. This in turn has impacted negatively on average capacity utilization and a consequent hike in the already strained unemployment situation in Nigeria. While commercial banks are expected to come to the rescue of SMEs, the truth must be said, that these institutions are profit oriented and may not be in a vantage position to give long term loans with depositors funds that are predominantly short tenured. Based on the findings of study, it is recommended that, the intervention programs put in place by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to ameliorate the challenges of the SMEs should be strengthened. It is not out of place too, for commercial banks to re-jig their SME desks in order to offer sustainable financial assistance to the SMEs. Lastly, the Bank of Industry (BOI) should be properly positioned in its mandate of providing financial assistance for the establishment of large, medium and small projects as well as the expansion, diversification and modernization of existing enterprises and to rehabilitate the ailing ones.

Environmental Scanning and Market Share of Selected Small and Medium Scale Enterprises in Lagos State, Nigeria

Environmental scanning plays a critical role in ensuring that the performance of small and medium scale enterprises (SMEs) is improved and therefore serves as a good avenue for organisational sustainability. Earlier studies have focused on the challenges faced by SMEs Owners, managers, and employees but this study will concentrate on environmental scanning as they affect market shares of SMEs in Lagos State Nigeria. Due to a poor understanding of the factors that play out in the organisation, SMEs have experienced a decline in market share as they are unable to meet expected benchmarks; hence this paper assessed the effect of environmental scanning on the market share of selected SMEs in Lagos State, Nigeria. A cross-sectional survey research design was adopted for the study. The population of this study consist of the owner/managers of SMEs located in Lagos State. The population was given as 8,396 sources provided by SMEDAN in conjunction with the Nigerian Bureau of Statistics (NBS). The sample of the study was determined from the population using the research advisors sampling table resulting in 370 also a 30% provision was made to take care of such discrepancies, making a total of 481. A stratified and simple random sampling technique was employed, a well-structured and adapted questionnaire was administered to the respondents. ’Cronbach’s alpha reliability coefficients ranged from 0.718 and 0.910. Data were analysed using descriptive and inferential statistics. The result of simple linear regression revealed that that environmental scanning has significant effect on market share (β = 0.513, t = 10.782, R2 = 0.230, p < 0.05). The study recommends that the management team of the selected SMEs should ensure they adopt and implement proper environmental scanning to increase their market share. Also, the study recommends that SMEs should identify with their employees to a great extent so as to boost and improve creativity within the organisation.

Does Entrepreneurship Financing Create Employment in Nigeria? The Role of Small and Medium Scale Enterprises (SMEs)

The current level of unemployment in Nigeria in the recent times has been worrisome, and various advocacies by scholars and policy analysts have suggested that entrepreneurship, especially small and medium scale enterprises could generate employment in the large measures. Meanwhile, inadequate financing has been identified as a strong factor causing a setback to entrepreneurship development in Nigeria. Against this backdrop, this paper provided empirical answers to whether entrepreneurship financing, from the SMEs perspective could generate employment in Nigeria. In answering the research question, data were extracted from 1992 to 2019 from secondary sources. Consequently, the data passed through various pre-tests such as unit roots and Cointegration tests before it was estimated via the application of Canonical Cointegrating Regression (CCR). The findings of this study were summarized as follows; the Commercial Banks Loans to SMEs contributed both positive and significant impact to employment generation in Nigeria. Likewise, that Commercial Banks total credits to private sector contributed both positive and significant impact to employment generation in the country. Hence, this study submits that that entrepreneurship (SMEs) financing contributes to employment generation in Nigeria. In the light of the above submission, this study recommends that any time the policymakers in Nigeria desire to address the current devastating level of unemployment in Nigeria, financing of entrepreneurship, especially SMEs should be the priority of the government at levels in the country. And as such, employment generation will be stimulated in the long run.

Impact of Electricity Supply on the Performance of Small and Medium-Scale Enterprises (SMEs) in Nigeria: A Case Study

Despite the fact that past empirical studies have reported that numerous factors affect the performance of SMEs in Nigeria, yet power supply, which is the strategic driver of economic activities and its spillover effects on the performance of SMEs in Nigeria has not been fully investigated in the country. Against this backdrop, this study examined the impact of electricity on the performance of SMEs in Ado-Odo, Ota LGA, Ogun State. Consequently, the questionnaires were administered to the respondents using the method of purposive sampling. The data was analyzed using Statistical Package for Social Science (SPSS), variance analysis (ANOVA) and Correlations and Ordinary Least Squares (OLS) techniques. A total of 120 questionnaires were distributed, of which 90 were compiled and analyzed. The findings showed that there is significant impact of electricity supply on the performance of SMEs in Ado-Odo Ota Area, in Ogun State. Also, alternative power sources have significant impact on performance of SME in Ado-Odo Ota Area, in Ogun State. Therefore, by and large, from the findings of this study, the paper made the following recommendation for the policymakers and business owners in Ado-Odo, Ota Area of Ogun State in particular, and Nigeria by extension that sufficient supply of electricity should be placed in a place that maximizes the efficiency of small and medium-sized businesses. In the same vein, SMEs owners should strive to use alternative sources of power to boost the performance of SMEs, and meet their market objectives.

Working Capital Management and SMEs Profitability in Emerging Economies: The Ghanaian Case

This study empirically examines the impact of working capital management (WCM) on the profitability of Small and Medium Scale Enterprises (SMEs) in the context of a developing economy, Ghana. We analyzed data on 366 SMEs over a 10-year period, spanning 2007 to 2016. Generalized method of moment (GMM) estimation was employed. The results reveal a positive relationship between trade payable period and profitability. The inventory conversion period and cash conversion cycle show a negative association with profitability. The results show an inverted U-shaped relationship between trade receivables collection period and corporate profitability, an indication of an optimal trade receivables collection period that maximizes profitability. Further check suggests a deviation from the optimal trade receivables collection period significantly and negatively affects corporate profitability. The study reveals the need for firms to ensure efficient management of working capital to maximize profitability.

Crisis management in small and medium scale enterprises: a systematic literature review

The study presents the findings of a systematic literature review of crisis management in Small and Medium Scale Enterprises (SMEs) referring to recent literature. Crisis management studies have received significant attention in academic research. This can also be observed in organizational crisis management. Compared to larger organizations, the attention received for SMEs was inadequate. Recognizing the dearth of SME crisis management studies in the existing literature of crisis management, this systematic literature review on SMEs aims to recognize the issues around academic research on SME crisis management and to identify the strategies applied by small business entrepreneurs against crisis vulnerability. Thus, two questions are addressed: what has been done in SME crisis management research, and what trends have marked this phenomenon in research arenas. This review considered 181 research articles published on SME crisis management since 2000. Exploring the existing SME crisis management literature identified three major themes: Crisis preparedness measures, Crisis impact on SMEs, and SMEs' strategic approach. Following the identification of gaps in the literature, the findings suggest future research areas of SME crisis management with organizational perspective, crisis experience towards crisis learning, crisis learning as a strategic approach, and networking as a social coping strategy. The synthesis action also directed future research in the field.

Determining and evaluating socially sustainable supply chain criteria in agri-sector of developing countries: insights from West Africa cashew industry

Social sustainability issues such as labour rights concern in the agricultural sector receive significant attention from several stakeholders. The role of small and medium scale enterprises (SMEs) that dominate the sector’s supply chain in developing countries remains critical in implementing initiatives to address these issues. Through a four-phase methodology, this study proposed the criteria of a socially sustainable supply chain (SSSC) guided by ISO 26000 and based on empirical evidence from the cashew industry. Subsequently, based on the Best worst method and Grey relational analysis, the criteria are evaluated by cashew manufacturing SME managers to determine how SSSC initiatives can be implemented. The study shows that food safety, labour and work condition, traceability, and child and force/prison labour emerge in order of importance as a pathway for implementation of SSSC. The study also provides insight into achieving SSSC among various manufacturing SMEs and understanding their assessed SSSC performance. The study suggests that agricultural sector SMEs that implement SSSC practices through social compliance or collaborations are more aware of the implementation challenges. On the other hand, SMEs that generate SSSC practices may perceive their social sustainability performance in the supply chain much higher than adopters who meet customers’ sustainability requirements.

An Empirical Investigation of Innovative Management Practices of Small and Medium Scale Enterprises (SMEs)

Innovation is considered an essential activity for small and medium-scale enterprises (SMEs). The contribution of innovation in the Indian economy is very noticeable. India is continuously improving and has jumped to the 52nd position in the overall world ranking in 2019. The objectives of this study are to identify the factors of innovative management practices indulged in SMEs to achieve innovation and to propose a framework for measuring firm performance in the region of Chhattisgarh state in India. Data was gathered using a self-monitored questionnaire survey and an exploratory factor analysis (EFA) method using SPSS 20.0 software was applied to get the factors of innovative management practices. This study identified eight factors of innovative management practices involved in SMEs. Further, their reliability test and mean value analysis has been done. A conceptual framework of firm performance measurement is also presented at the end. Also, this study contributes a good amount of work in innovation management literature which will help scholars and academicians for future work.

The role of internationalization in entrepreneurial orientation-performance link: empirical study of SMEs in a developing nation perspective

PurposeThis study aims to examine the mediating role of internationalization in the relationship between the dimensions of entrepreneurial orientation (EO) and performance, empirical study of small and medium scale enterprises (SMEs) in a developing nation.Design/methodology/approachThe study uses a sample of 158 exporting SMEs based in the sub-Saharan developing economy, Ghana. The use of hierarchical regression (ordinary least square analysis) was used by the researcher to assess the suggested model of the study.FindingsLargely supporting the conjectural predictions, the study indicates that EO positively and significantly influences performance; internationalization fully mediates the relationship between innovativeness and performance of export firms; internationalization fully mediates the relationship between risk-taking and performance of export firms; and finally, internationalization partially mediates the relationship between competitive aggressiveness and performance of export firms. Managers are, therefore, encouraged to strategically develop both their EO and internationalization, as the study has confirmed that EO has both a direct and indirect relationship with performance.Originality/valueThis study integrated a resource-based view of the firm and international entrepreneurship theory as a theoretical foundation. Theoretically, internationalization’s mediating role reveals the relevance of this construct in the linkage between entrepreneurial orientation and firm performance. Furthermore, the study extends the entrepreneurial orientation concept to the international business literature by estimating and testing models of the mediating link between entrepreneurial orientation and performance. Moreover, the study seeks to broaden the knowledge of entrepreneurial orientation and its relationship with performance in small and medium businesses. The study further extends the limited studies on performance, driven by entrepreneurial orientation and internationalization in a developing nation (Ghanaian) context. This paper besides seeks to highlight the impact of entrepreneurial orientation on performance when channeled through internationalization. The study also reveals the dimensions of entrepreneurial orientation to be important antecedents of internationalization, in attempts at unearthing the critical predictors of firm performance, especially those of international characteristics.

The Impact of High Credit Risk in Financing Small Scale Businesses in Ghana: The Case of Universal Merchant Bank

This descriptive study evaluated the challenges and prospects associated with reducing high risk factors associated with financing small and medium scale enterprises (SMEs) in Ghana with the search light on the operations of Universal Merchant Bank. The study adopted the cross-sectional research design to conduct the study and this enabled the researcher to solicit information from both customers and officials of Universal Merchant Bank for their views. Purposive sampling technique was used to select officials of the bank. The study employed qualitative research analytical tools which focused on the use of tables, pie charts, percentages and bar charts in analyzing and interpreting the data captured from the field. The study found out that although SMEs constitute the engine of growth in the Ghanaian economy and therefore ought to be financially fluid, banks often discriminate against them in their loan investment portfolios owing to serious financial injuries often sustained in the process of providing the badly needed funds. Numerous challenges associated with financing SMEs in Ghana stretch from deliberate efforts at misapplying solicited short-term funds for capital expenditure such as buying land or vehicles which results into repayment challenges. The study noted with surprise that unfair trade practices especially dumping of cheap Chinese products on the local market also result in poor sales for the SMEs leading to difficulty in honoring structured loan repayment schedules. The study made key recommendations.

How does buyer-seller information sharing affect procurement quality performance? Insight from SMEs in a developing African economy

PurposeThough extant literature proposes buyer–seller information sharing as a crucial variable for quality improvement, there is a dearth of empirical understanding of how it affects procurement quality performance. The present study aimed at addressing this knowledge gap by using small- and medium-scale enterprises (SMEs) in a developing African economy as an empirical context.Design/methodology/approachThe research hypotheses are tested on survey data from 138 SMEs in Ghana using structural equation modeling.FindingsResults show that buyer–seller information sharing is positively related to procurement quality performance and that high levels of buyer–seller information sharing lower procurement quality performance.Research limitations/implicationsThough the study demonstrates that there is a limit to the procurement quality performance benefit of buyer-seller information sharing, it does not empirically analyze the conditions that may relax this limit.Practical implicationsThis research highlights both the bright and dark sides associated with buyer-seller information sharing and how they work out to determine procurement quality performance. It shows that SMEs could optimize procurement quality performance when they pursue a moderate level of buyer–seller information sharing.Originality/valueThis research advances the sparse literature on the procurement quality performance construct and its determinants within the context of SMEs. Unlike prior research that focuses on information technology, this study explicitly analyzes the role of information sharing in determining procurement (quality) performance and shows that differing levels of buyer–seller information sharing impact procurement quality performance differently.

Impact of Private Bus Operations on Small and Medium Scale Enterprises (SMEs) Productivity in Ibadan Metropolis of Oyo State, Nigeria

Impact of Private Bus Operations on Small and Medium Scale Enterprises (SMEs) Productivity in Ibadan Metropolis of Oyo State, Nigeria

INFORMATION AND COMMUNICATION TECHNOLOGY IN MANAGING SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Information Communication Technology has generally been acclaimed as an important tool exploited by medium and large-scale enterprises for boosting profitability and enhancing viability. Though Small and Medium Scale Enterprises (SMEs) constitutes a major percentage of businesses in most countries, their ICT adoption rate is still low. This study examined the role of ICT as a tool that SMEs can deploy for the economic development of Nigeria. A questionnaire was employed and administered to a total of 175 SMEs randomly chosen from five different sectors of the Nigeria economy (educational, micro finance, transport, commerce and hospitality). Chi-square test was used to evaluate the hypothesis and the findings of the research revealed that (1) low awareness level of the benefits of ICT incorporation in the management process of most SMEs has been a major cause of its low adoption; (2) poor media transmission framework, high cost of ICT hardware, deficient government support and legislation for internet business among other factors have hindered the adoption of ICT in the management process of SMEs; (3) high cost of funds in Nigeria have also made it unprofitable for SMEs to source fund for ICT expansion and implementation. The research recommends among other measures, the investment on infrastructure and adequate incentives to promote the utilization of ICT among SMEs. Investment banks and other specialized institutions should brace up with their responsibilities and promote local industries through affordable credit schemes.

CROWDFUNDING AND SMEs FUNDING IN NIGERIA-PROS AND CONS

Crowdfunding is a new layer of fundraising for small and medium-scale enterprises (SMEs) and other innovative ideas that offer an incentive to lift the power of the Internet from the crowd. As a new method of fundraising, the main knowledge of the idea is missing on the part of the entrepreneur, the financial professional, the academician and the general public. This calls for a deeper understanding of concepts, models, pros, cons; it is against this backdrop that the study looked at crowdfunding as alternative sources of financing for small and medium-scale enterprises The study used an exploratory research approach with a focus on literature in the fields of Business Management, Accounting, and Finance, Internet academic journals, blogs, government publications and records, a variety of research reports and by individual researchers The conclusion is that crowdfunding for small and medium-scale enterprises (SMEs) activities is a possibility in Nigeria and should be seen by people as an idea and a shift from negative thinking; of course, regulatory and other stakeholders have complementary roles to play.

SMEs Management Success Determinants and its Implications on Their Performance in South West, Nigeria

Purpose: In developing nations, like Nigeria, Small and Medium scale Enterprise (SME) is supposed to be a catalyst for socio-economic development and employment generation. Eighty-five percent of the SMEs failed before their fifth anniversary. The study undertook to identify influential management success determinants and the concomitant effects on SMEs’ performance in Nigerian unstable business environment. Approach/Methodology/Design: The study used a cross sectional survey research design and probability sampling methods of stratified, random and proportional samplingto select 1102 CEOs. There were 988 completed questionnairesreceived back from respondents, giving and excellent response rate of 89.66%. Findings: The result of the study revealed significant difference in the evaluations of management success determinants to performance and management skills of the SMEs operators, organizational structure and innovation as being the most critical success factors for the SMEs in the Nigerian business environment. The most significant individual effects on SMEs performance are traceable to organizational structure, management skills and environmental scanning. There is a combined strong effect of the management success determinants on SMEs performance. Practical Implications: Apart from contributing to the existing literature on SMEs performance, the study also noted that new entrants into Nigerian market environment will succeed if the right organizational structure is put in place and innovation as well as management skills are taken seriously. Originality/Value: This study contributes by discovering that management skills of the SMEs operators, organizational structure and innovation are the most critical success factors for the SMEs in the Nigerian business environment.

Small business awareness and adoption of state-of-the-art technologies in emerging and developing markets, and lessons from the COVID-19 pandemic

Many challenges continue to hinder digital technologies' adoption by small and medium scale enterprises (SMEs) in developing economies. Comparatively, there are more success stories by SMEs in emerging markets. However, most SMEs operating in the informal sector in the emerging markets and developing economies (EMDEs) face similar challenges that inhibit the adoption of advanced technologies and innovations needed to improve business operations and re-engineer processes. This article evaluates the implementation and use of state-of-the-art technologies by SMEs in EMDEs to improve operations performance and create sustainable competitive advantages. Further, the papers in this Special Issue identify FinTech and analytical algorithms as some of the current technologies employed by SMEs in EMDEs to improve operations and processes in the manufacturing and service industries. The recognized technologies and technical innovations that seem novel in EMDEs have long existed in the advanced economies. Most state-of-the-art technologies, including cloud computing, 'big data', and predictive analytics that can improve operations and strategic decisions, are yet to make inroads in most EMDEs. Also, disruptive computing technologies, data analytics, and the Internet of Things (IoT) required to engineer new business models, reduce overheads, enhance competitive advantages, and digitize SMEs' business operations remain untapped. The absence and non-adoption of digital technologies in EMDEs explain why business activities in most EMDEs remain shut during the outbreak of SARS-CoV-2 and the community lockdown to contain the COVID-19 pandemic. The strategies to survive the 'new normal' imposed by COVID-19 and fierce global competition includes a successful adoption of advanced technologies.

Mediating effect of risk management practices on the relationship between owner's risk attitude and business performance of small and medium enterprises: evidence from north central province of Sri Lanka

Small and Medium Scale Enterprises (SMEs) are known as an important strategic sector which has the potential to contribute towards GDP, employment generation, poverty alleviation and regional development particularly in the developing countries such as Sri Lanka. However, the main issue of SMEs is poor business performance that affects adversely their survival in the long run. Among other reasons, poor risk management practices have been identified as a main cause for such failures. Although risk taking is a fundamental for business performance, not managing the former properly will have an adverse impact on the latter. Therefore, this study aims to investigate the mediating impact of risk management on the relationship between owner's risk attitude and business performance. The study was a basic explanatory type quantitative examination that followed the deductive reasoning method. A conceptual framework has been developed based on the literature survey that provided the basis for empirical investigation. Out of the SMEs established in the North Central Province of Sri Lanka, 200 SMEs have been selected as the sample of the study following the random sampling procedure. Data were collected on researcher-administrated questionnaires and were analyzed using SPSS statistical package. As per the stepwise regression analysis, it was found that risk management practices of SMEs mediate the relationship exists between the owner's risk attitude and business performance. Based on the findings, the study recommends that owners of SMEs should implement appropriate risk management practices in their SMEs while government institutions related to the SME sector should provide them with necessary support to establish proper risk management practices in their organizations.

Barriers in implementing lean manufacturing in Indian SMEs: a multi-criteria decision-making approach

Purpose This study aims to investigate the interrelationships among the Lean manufacturing (LM) adoption barriers in Indian SMEs. This issue has its own importance as LM has become the inescapable requirement for small- and medium-scale enterprises (SMEs) because of the increased concerns about quality, cost, delivery time and rapidly growing competition in the manufacturing sector and in India it is opposed by many factors/barriers. To act for the eradication of these barriers, we need to systematically analyze them. Design/methodology/approach Based on the available literature and consultation with the experts, the authors identified 16 LM barriers for Indian SMEs. The authors analyzed the interdependencies among the barriers and prioritized them using integrated Grey-decision-making trial and evaluation laboratory (grey-DEMATEL) approach. Findings The findings show that limited financial resources, fear in adopting new technology, lack of top management commitment and poor leadership quality are the most critical barriers for LM diffusion in Indian SMEs. Research limitations/implications The present research is based on the experts’ inputs, which may be subject to individual biases. In developing countries, such as India, geographical influences are also possible, which are neglected in this study. Practical implications This study provides significant insights that can help SMEs to focus on critical cause group barriers to accelerate the LM penetration. Originality/value The authors have proposed a Grey-DEMATEL-based LM barrier evaluation framework. Here, the authors analyze the interrelationships among the barriers for LM and segregate them in cause and effect groups.

Credit Upgrades and Inclusive Growth: Examining the Links

This paper examines some of the channels through which some of the anticipated benefits from the 2013-2015 Philippine credit upgrades are expected to flow to poor and low income households. It identifies financial inclusion as an important ingredient in further boosting economic growth and improving its inclusiveness, notably as far as its poverty reduction impact is concerned. Nevertheless, this paper finds evidence that the credit market is still highly segmented, and non-inclusive for the vast majority of small and medium scale enterprises (SMEs) and low income households in the Philippines. It is also likely that Philippine public sector investments are not yet as strong as could be programmed — leading to possible underinvestment in public goods. And because some key public goods can also disproportionally benefit the poor and low income population, then this also signals a severe disconnect between the credit upgrades and the vast majority of the population that hopes to benefit from them.

Effect of COVID-19 Pandemic on Small and Medium Scale Businesses in Nigeria

As the world is struggling to fight off the COVID-19 pandemic, counties are witnessing unprecedented economic slowdowns and shutdowns. In Nigeria, the financial crisis is affecting the stability of small and medium scale enterprises (SMEs). As the pandemic continues to ravage the country, SMEs are struggling to survive due to the decline in the production volumes and harsh market conditions. Our findings revealed that the cessation of movement, the reduction in consumer spending power, and decrease in imports is negatively affecting Nigerian SMEs. However, there are government policies set in place to protect SMEs, but there is a need for more efforts and interventions to enable them to survive the consequence of the pandemic. However, SMEs should be more proactive in adapting to this new situation.