Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Covenant Journal of Entrepreneurship (CJoE)
Vol. 1 No. 2, September 2018 (Special Edition)
Publication of the Center for Enterpreneurial Development Studies, Covenant University, Canaanland.
Editor-in-Chief: Dr. Ibidunni Ayodotun Stephen [email protected]>
Managing Editor: Edwin O. Agbaike [email protected]
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Articles
Assessment of Benefits and Constraints of Alternative Entrepreneurial Banking Method in Rural Households in Oyo State Ishola T.A., Abdul K.O. & Salako Y.A. 1
Impact of Good Governance and Entrepreneurship in Nigeria Abubakar Faruk & Abolaji Jamiu Atobatele 14
Entrepreneurship Education and Orientation as Performance Driver in Small and Medium-Scale Enterprises Dr. James Nwoye Obi 26
Effect of Chinese Product Price, Quality, Innovativeness and Brand Awareness on Customers‟ Loyalty:An Empirical Analysis of Local Industries in Northern Nigeria Mukhtar Halliru, Ibrahim Kabir & Mukhtar Salisu Abubakar 41
The Relevance of Corporate Affairs Commission to Small and Medium Enterprises (SMES) in Nigeria (A Study of Konum Farms Limited, Amai, Delta State) Dr. Matthew Ezem Ibekwe 53
Youth Entrepreneurship Education and Sustainable Economic Development: A Conceptual Review Olajuwon Kamil A. & Awoyemi Samuel O. 64
Effect of Logistics, Supply Input, Production and Finance on Small and Medium Enterprises (SMEs) Performance in Kaduna State. Ogundare Jermiah Ayodele Taiwo &Alalade Omolola Olufunke 72
iii Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Assessment of Benefits and Constraints of Alternative Entrepreneurial Banking Method in Rural Households in Oyo State
Ishola T.A,, Abdul K.O. & Salako Y.A.
Department of Agricultural Education, Michael Otedola College of Primary Education, Noforija, Epe, Lagos, Nigeria. [email protected] [email protected] [email protected]
Abstract: The study focused on the assessment of alternative entrepreneurial banking method among rural households in Oyo State. The study was carried out in fifteen (15) rural communities of three (3) Local governments of Oyo State namely: Atiba, Ibadan South East and Atisbo. A total 0f 150 respondents were used and all the 150 respondents‟ responses were retrieved for analysis. Result of the study indicated that there were more respondents (43.3%) who use mobile bankers (ajo ojojumo) to support their rural entrepreneurial activities than other means of banking in the study area. Results on the perceived factors that affect the choice of alternative banking method has it that availability, convenience and cost of banking services are the major factors to be considered in the choice of banking method for various rural entrepreneurial activities. On the perceived benefit derived in the use of alternative banking to support rural entrepreneurial activities, it was gathered that alternative banking method helps in solving financial problems with a weighted mean score of 1.87. Whilst, on the constraints encountered in the use of alternative banking methods to support rural entrepreneurial activities, almost all the rural households (89.3%) believes the risk of losing their money to fraudster in alternative banking was the major constraints with a weighted mean score of 1.85. Correlation analysis of 1 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
tested hypothesis showed that the constraints encountered by respondents in the use of alternative banking method (r = -0.183, p = 0.005) is significantly related with perceived factors that affect respondents‟ choice of banking method to support their rural entrepreneurial activities. (r = 0.721, p = 0.000) Keywords: Alternative banking, Factors, Benefits, Constraints, Socio- economic characteristics
Introduction resort to alternative banking and to Rural communities of Nigeria are access funds for their operations, such important entities in national as traditional savings and credit development and as such the various association (TRASCAS) which are sub sources of fund for rural business divided into rotating savings and credit activities must be given serious association (ROSCAS) popularly attention. The need for an all-round known as "Esusu" and non- rotating improvement in the livelihood of rural savings and credit association (Non- household cannot be overemphasized ROSCAS) popularly known as particularly at this time of serious "Awidodun", mobile bankers (MBs) necessity to reduced poverty to the popularly known as "Ajo Ojoojumo", barest minimum. Oluwatayo, (2009) has professional money lenders and pointed the need of rural household to cooperatives and credit union. These find new ways to raise income and various financial systems can be reduce environmental risk for both on referred to as indigenous banking and off-farm activities, which differs system and are still made use of today in sharply by the degree of freedom of various rural communities. The choice and the reversibility of the bureaucratic bottleneck usually outcome. encountered in the convectional banks
The provision of fund for rural has therefore given rise to the need of household activities by convectional alternative entrepreneurial banking bank has not been adequate in meeting method in rural household in Oyo State. the needs of rural household hence the This study is therefore predicated on the necessity for entrepreneurial banking Perceived attribute theory which methods to boost entrepreneurial posited five attribute upon which an activities. This and many other reasons innovation and human activities are has given rise to the assertion of judged. These are; Triability, Adebayo and Adeola (2007) that the Observability, Relative advantage, relevant of financial institutions(i.e. Complexity and Compatibility. It is convectional banks in the rural areas are against this background that this study to enhance productivity and also seeks to address the following research promote standard of living by breaking objectives. the vicious cycle of poverty in the rural areas. Research Objectives To determine the socio- economic Statement of the Problems characteristics of the respondents; The hindrances that are being experienced in accessing credit facilities To ascertain the various banking from formal systems compel the poor methods used by respondents; and informal business enterprises to
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To determine perceived factors that local government area from each affect respondents in their choice of senatorial districts of state. The third banking; stage involved random selection of five To identify the benefits derived by (5) rural communities in each Local respondents in alternative banking Government Area. At the final stage, ten method; (10) rural households were selected in To identify the constraints each rural community. A total of 150 encountered by respondents in the questionnaire were administered (i.e. use of alternative banking. Atiba = 50, Ibadan South East= 50 and Atisbo = 50). The data obtained from Research Hypotheses the respondents were subjected to The following null hypotheses were descriptive and inferential statistical developed and tested in the study; analysis, while probit regression and H0 There is no significant 1 Pearson Product Moment correlation relationship between the socio- (PPMC) was used to in analyzing economic characteristic of the hypotheses. respondents and the choice of alternative banking method. Results and Discussion H02 There is no significant Social economic characteristics relationship between perceived The Table 1 below shows that the male factors that affect respondents‟ respondents have a percentage of 11.3 choice of banking method and while the female counterpart has 88.7. the constraints encountered by This implies that most of the respondents in the use of respondents are women. Mathew (2013) alternative banking method. in support of this finding opined that alternative banking is most preferred by Research Methodology women. Also, Mishra and Singh, The study was conducted in Oyo State (2013). Laforet and Li (2005) in line of Nigeria. A total number of 150 rural with this study found a higher adoption households were selected using a rate of traditional banking among Multistage Random System. The split- women than men. In addition, the table half method was used to determine the also shows that 85 (56.7%) were reliability of the instrument. The between the age of 31-45, while 12 Spearman Rank Order Correlation (8%) were above the age of 60 years Coefficient was used to calculate the respectively. The result of age analysis reliability and reliability co-efficient of shows that majority of the respondents 0.76 was obtained indicating that the are still within the active age range. M- instrument is highly reliable. Oyo state Pesa, Mbiti and Weil (2011) in support has three senatorial districts; the first of this finding identified age, has stage of the sampling involves selection determinants of traditional or alternative of three senatorial districts Oyo North: banking adoption among rural with a population of 2,445,900, Oyo households. South: with a population of 2,765,430 On marital status of the respondents, 94 and Oyo Central with a population (62.7%) of the respondents are married, 2,542,460 (City population 2017). The while 17 (11.3%) of the respondents are second stage involves the division of the widows. This implies that majority of senatorial districts into Local the rural households are married men Governments and selection of one (1)
3 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) and women. On the level of education, household size is a strong determinant it was revealed that 95 (63.3%) of the of alternative banking uses among rural respondents had no formal education, 30 household. Suoranta and Matilla (2004) (20%) of the respondents went to found that household income primary school, while 25 (16.7%) of the significantly influence traditional respondents went to secondary schools. banking adoption. This may account for their low level of On income generating activities, the patronizing conventional bank. M-Pesa, finding revealed that 11.3% of the Mbiti and Weil (2011) in support of this respondents are civil servants, 22% are finding identified level of education and artisans, and 28% are farmers while where people lived as determinants of 38.7% are traders. This implies that traditional banking adoption. The result majority of rural household embracing on household size of the respondents alternative banking are individuals that shows that 27.7% of the household‟s are involved in one entrepreneurial sizes ranges between 1-5, while 54.7% activity or the other. ranges between 6 -10. This implies that
Table 1: Social Economic Characteristic
Sex Frequency Percentage (%) Male 17 11.3 Female 133 88.7 Age 30 & below 20 13.3 31-45 85 56.7 46-60 33 22 Above 60 12 8 Marital status Single 21 14 Married 94 62.7 Divorced 18 12 Widow 17 11.3 Religion Islam 78 52 Christian 56 37.3 Traditional 16 10.7 Formal Education Attended No formal education 95 63.3 Primary school 30 20.0
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Secondary school 25 16.7 Household Size 1 - 5 41 27.3 6 – 10 82 54.7 10 – 15 27 18 Income Generating Activities Cash crop production 7 4.7 Live stock production 5 3.3 Fish farming 10 6.7 Arable crop production 5 3.3 Farm produce processing 15 10 Civil service 17 11.3 Artisan 33 22 Trading 58 38.7 Total 150 100
Alternative Banking Methods and choose non-ROSCAS (Awidodun) as Saving Pattern of Rural Households their banking methods. 20.7% percent Table 2 below shows frequency of respondent patronize formal bankers. distribution of the respondents by This implies that higher percentage of alternative banking method and their the respondents have saving pattern, 43.3% of the informal/unorganized banking methods respondents chooses mobile bankers as their choice and therefore the most (Ajo) as their banking method, 24.0% preferable banking system among rural choose ROSCAS (esusu), while 9.0% households.
Table 2: Frequency Distribution of the Respondents by Alternative Banking Methods and Saving Pattern
Banking Method Frequency Percentage
Convectional banks (e.g. first banks, UBA). 21 14
Microfinance banks 13 8.7
NACRDB 0 0
ROSCAS (Esusu) 36 24
Non-ROSCAS 9 6 (Awidodun)
5 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Mobile bankers (Ajo 65 43.3 Ojoojumo) Professional money lender (PML) 0 0
Cooperative society and credit union 6 4
Total 150 100
Perceived factors that affect the (65.3%), convenience in access to credit choice of alternative banking methods facilities (55.3%), flexibility of banking Table 3 below shows that 81.3% of the services (52%), volume of funds respondents considered availability of involved in banking transaction banking facilities as a factor to be (52.7%), risk perceptions by customers considered in the choice of alternative (64.7%) and need for safety and security banking method. Other factors to be (62.7%). This implies that majority of considered are convenience of banking the rural household heads considered all services (54%), cost of banking services the following as the factors that affect (56.7%), social identification (60.7%), the choice of banking method. proximity of banks to rural communities
Table 3 Frequency Distribution of the Respondents by perceived factors that affect the choice of alternative banking methods
Statement Yes (%) No (%)
Availability of banking facilities 122 (81.3) 28 (18.7)
Convenience of banking services 96 (64) 54 (36)
Cost of banking services 85 (56.7) 65 (43.3)
Social identification 91 (60.7) 59 (39.3)
Proximity of banks to rural communities 98 (65.3) 52 (34.7)
Convenience in access to credit facilities 83 (55.3) 67 (44.7)
Flexibility of banking services 78 (52) 72 (48)
Volume of funds involved in banking transaction. 79 (52.7) 71 (47.3)
Risk perceptions by customers. 97 (64.7) 53 (35.3)
Need for safety and security. 94 (62.7) 56 (37.3)
Perceived benefit derived in the use of that the result of the most of the rural alternative banking methods households utilizes alternative bank It was revealed from the table that services in solving financial problems as 137(91%) of the respondents indicates major benefits, 7(4.7%) as minor
6 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) benefits, while the remaining 6(4%) as while the remaining 11(7.3%) as no no benefits and this was ranked 1st with benefits and it was ranked 5th with an weighted mean score of 1.87. This may weighted mean score of 1.35. more so, account for high patronage of it was revealed in the table that 69(46%) alternative banking among rural of the respondents indicated that the households. The table also asserted that alternative banking gives room for 90(60%) of the respondents indicates depositing small amount of money as that the use of the alternative banking major benefits, 61(40.7%) as minor help to increase business activities as benefits, while the remaining 30(13.3%) major benefit, 59(39.3%) as minor indicates it as no benefits and it was benefit, while the remaining 1(0.7%) ranked 6th with weighted mean score of indicates it as no benefit and this was 1.33. the table also revealed that ranked 2nd with weighed mean score of 69(46%) of the respondents indicates 1.59. In the absence of financial that Risk pooling is encouraged to assistance for starting small business facilitate the accessibility to credit rural dweller embraces alternative facility with little or no interest attached banking system. Awoluyi (2001) in as major benefits, 61(40.7%) as minor support of this finding posits that benefits, while the remaining 20(13.3%) provision of agricultural loan and start- indicates as no benefits and it was up capital account for why people prefer ranked 7th with a weighted mean score traditional or alternative banking to of 1.32. the table also revealed conventional banking system. It was that64(42.7%) of the respondents revealed in the table that 74(49.3%) of indicated that Accessibility and nearest the respondents indicates that the to the rural community as major Members of rural household have benefits, 68(45.3%) as minor benefits, access to their money at anytime as while the remaining 18(12%) indicates major benefit, 75(50%) as minor as no benefits and was ranked 8th with a benefits and the remaining 1(0.7%) weighted mean score of 1.31. it was indicates it as low benefits and was asserted from the table that 59(39.3%) ranked 3rd with weighted mean score of 0f the respondents indicates that 1.49. also, the table also asserted that Alternative banking often encourage 74(49.3%) of the respondents indicated group liability as major benefits, that the alternative banking has brought 75(50%) as minor benefits, while the about development of other source of remaining 16(10%) indicates as no employment among rural household as benefits and it was ranked 9th with a major benefits, 70(46.7%) as minor weighted mean score of 1.29. Finally, benefits, while the remaining 6(3%) as the table revealed that 61(40.7%) of the no benefits and it was ranked 4th with respondents indicates that alternative weighed mean score of 1.45. The table banking encourages saving as major also revealed that 64(42.7%) of the benefits, 69(46%) as minor benefits, respondents indicated that ease of while the remaining 20(13.3%) as no operation of alternative banking as benefits and was ranked 10th with a against conventional banking as major weighted mean score of 1.27. benefits, 75(50%) as minor benefits,
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Table 4 Frequency distribution of the respondents by perceived benefit derived in the use of alternative banking methods Major Benefits Minor Benefits No Benefits Statement WMS Rank No % No % No % Utilization of alternative bank services in 137 91.3 7 4.7 6 4 1.87 1ST solving financial problems. Use of the alternative banking help to 90 60 59 39.3 1 0.7 1.59 2ND increase business activities. Alternative banking has brought about development of other source of 74 49.3 70 46.7 6 3 1.45 4TH employment among rural household. Members of rural household have access 74 49.3 75 50 1 0.7 1.49 3RD to their money at anytime. Ease of operation of alternative banking 64 42.7 75 50 11 7.3 1.35 5TH as against conventional banking. Alternative banking gives room for 69 46 61 40.7 20 13.3 1.33 6TH depositing small amount of money. Alternative banking encourages saving. 61 40.7 69 46 20 13.3 1.27 10TH Alternative banking often encourage 59 39.3 75 50 16 10. 1.29 9TH group liability. Accessibility and nearest to the rural 64 42.7 68 45.3 18 12 1.31 8TH community. Risk pooling is encouraged to facilitate the accessibility to credit facility with 69 46 61 40.7 20 13.3 1.32 7TH little or no interest attached.
Constraints encountered in the use of ability and households without access to alternative banking methods insurance and financial market may be Table 5 below shows the result of the subjected to risk of losing their money constraints encountered in the use of to fraudsters in alternative banking. The alternative banking method. It was table also asserted that 80(53.3%) of the observed that 134(89.3%) of the rural respondents indicated that the rural households are usually subjected to risk household members may not have of losing their money to fraudsters in access to loan as major constraint, alternative banking and was considered 67(44.7%) as minor constraint while the by rural households as the major remaining 3(2%) indicates it as no constraint, 9(6%) as minor constraint constraint and was ranked 2nd with a while the remaining 7(4.7) indicates it weighted mean score of 1.51. This as no constraints and was ranked 1st supported by Staschen, (2009) who with a weighted mean score of 1.85. this opined that a number of interventions to is supported by(Chavas and Aliber, provide rural households with (2003) who pointed out that the affordable credit have been tried by efficiency of rural households may also government, non-governmental be influence by their management organizations, the private sectors, and
8 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) the local self-help organization but due indicates no constraints and it was to no formal education among rural ranked 6th with a weighted mean score households, they find it difficult to have of 1.33. 65(43.3%) of the respondents access to loan due to their belief in indicates that lack of safe guiding policy alternative banking. Moreso, the table or system in case of eventuality as also revealed that 65(43.3%) of the major constraints, 66(44%) as minor respondents indicate that the statement constraints, while the remaining on “The fear of death of alternative 19(12.7%) indicates no constraints and bank operators” as major constraints, was ranked 7th with a weighted mean 81(54%) as minor constraints while the score of 1.31. Also it was revealed from remaining 4(2.7%) as no constraints and the table that 55(36.7%) of the this was ranked 3rd with a weighted respondents indicates that lack of clear mean score of 1.41. the table also policy guidelines for the system as revealed that 63(42%) of the major constraints, 83(55.3%) as minor respondents indicates that Inability to constraints, while the remaining 12(8%) access professional advice on fund indicates it as no constraints and it was utilization as major constraints, ranked 8th with a weighted means score 83(55.3%) as minor constraints, while of 1.29. More so, it was asserted from the remaining indicates 4(2.7%) no the table that 60(40%) of the constraints and this was ranked 4th with respondents indicates that inexperienced a weighted mean score of 1.39. it was management by alternative bankers asserted from the table that 63(42%) of continues to inhibit efficiency of the the respondents indicates that the system as major constraints, 74(69.3) as alternative banking requires strong minor constraints, while the remaining knowledge and learning as major 16(10.7) as no constraints and was constraints, 78(52%) as minor ranked 8th with weighted mean score of constraints, while the remaining 9(6%) 1.29. finally, the table revealed that indicates as no constraints and was 62(41.3%) of the respondents indicates ranked 5th with a weighted mean score that Mistrust with local alternative of 1.36. 61(40.7%) of the respondents bankers as major constraints, 68(45.3%) indicated that Vulnerability to risks as minor constraints, while the among rural households as major remaining 20(13.3%) as no constraints constraints, 77(51.3%) as minor and was ranked 10th with a weighted constraints, while the remaining 12(8%) mean score of 1.28 .
Table 5; Frequency distribution of the respondents by constraints encountered in the use of alternative banking methods Major Minor No Statement Constraints Constraints Constraints WMS Rank No % No % No % Rural household are usually subjected to risk of losing their money to 134 89.3 9 6 7 4.7 1.85 1ST fraudsters in alternative banking. The rural household members may not 80 53.3 67 44.7 3 2 1.51 2ND have access to loan. The fear of death of alternative bank 65 43.3 81 54 4 2.7 1.41 3RD operators. Inability to access professional advice 63 42 83 55.3 4 2.7 1.39 4TH on fund utilization. Lack of clear policy guidelines for the 55 36.7 83 55.3 12 8 1.29 8TH
9 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) system. Mistrust with local alternative bankers. 62 41.3 68 45.3 20 13.3 1.28 10TH Inexperienced management by alternative bankers continues to inhibit 60 40 74 69.3 16 10.7 1.29 8TH efficiency of the system. Vulnerability to risks. 61 40.7 77 51.3 12 8 1.33 6TH Alternative banking requires strong 63 42 78 52 9 6 1.36 5TH knowledge and learning. Lack of safe guiding policy or system in 65 43.3 66 44 19 12.7 1.31 7TH case of eventuality.
Test of Hypotheses to their counterparts with formal H01: There is no significant education. Household‟s size has a relationship between the socio- negative coefficient showing that the economic characteristic of the higher the households size the lesser the respondents and the choice of patronage of alternative banking. Cash alternative banking method and Arable Crop Production has a The result of the probit regression positive coefficient. It implies that cash analysis of socio- economic and arable crops farmers patronize characteristic of the respondents in alternative banking method than those relation to banking method used is that are not. In line with this finding, presented in the table below. Osuagwu (2002) assert that Sex has a positive coefficient it can improvement in crop production over therefore be deduced that female the year have brought about the respondents in the study area patronize development of saving attitude through alternative banking method than their traditional banking system. Civil service male counterparts. Age is also has a negative coefficient. This shows significant and has positive coefficients. that civil servants prefer conventional This implies that the higher the age the banking than alternative banking. Being higher the choice of alternative banking educated, majority of civil servants are among rural households. Marital status aware of the benefit of conventional is also significant and has a positive banking system, thus their choice of coefficient. This implies that a married patronizing conventional banking household tends to patronize alternative Smith, (2002). Trader and Artisan has a banking than their unmarried positive coefficient. Amaoko (2012) in counterpart. Years of formal education support of this finding argued that has a negative coefficient meaning that traditional banking is most patronized rural household with no formal by market men and women and in rural education preferred alternative banking areas.
10 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Table 6: Analysis of the relationship between the socio- economic characteristic of the respondents the choice of alternative banking method.
Variables Coefficients (c-value) t-value Sex 0.347638 2.32 Age 0.221028 1.56 Marital status 0.464539 3.03 Formal education attended 0.256432 1.06 Household size -0.076283 -2.43 Cash crop production -0.246612 2.08
Arable crop production -0.154729 1.26 Civil service 0.103432 -0.08 Artisan -0.435283 3.65 Trading -0.347638 4.05
H02: There is no significant relationship adopted. Also, there is a significant but between perceived factors that negative correlation between the affect respondents‟ choice of constraints encountered and the use of banking method and the alternative banking method. This means constraints encountered by that the various constraints encountered respondents in the use of are cognitive determinant that inform alternative banking method what alternative banking method that Table 7 below clearly points out that should be avoided. This ultimately there is a positively significant implies that the reasons not to choose a relationship between the perceived particular alternative banking method factors affecting the choice of banking are usually due to level of constraints method and the use of alternative encountered. According to Freidman banking method. This means that (2010), the more convenient and perceived factor on choice of banking flexibility banking method is, the lower method is a cognitive determinant on the constraints encountered by rural the respondents‟ decision on which household. alternative banking method will be
11 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Table 7;Correlation analysis between perceived factors that affect respondents‟ choice of banking method and the constraints encountered by respondents in the use of alternative banking method.
Variable Correlation P – Value Decision Value Perceived factors that affect respondents‟ choice of 0.721 0.000 Significant banking method. Constraints encountered in the use of alternative banking -0.183 0.005 Significant method.
Conclusion and Recommendations in the use of alternative banking method In any developing economy like that affect the decision of respondents Nigeria, the importance of alternative on which alternative banking method to banking method cannot be over adopt. emphasized. Alternative banking has Recommendation significant effect on increase business Based on the findings of this study and activities thus improving the rural in order to improve the rural household household welfare. Based on the welfare the following recommendations findings of this research work, it was are hereby proffered: revealed that rural households preferred i. Alternative banking methods alternative banking methods to should be more organized to conventional banking methods. This is discharge its functions to the due to the fact that most of them are low maximum. income earners and they are faced with ii. Since rural households lack proper high transaction costs typically refer to information about micro finance time, effort, and money spent to reach a and conventional banks, there conventional bank. should be proper awareness and Finding on the Hypotheses dissemination of information to Three (3) hypotheses were stated and rural households to enable them tested with the use of probit regression patronize formal banking system and Pearson Product Moment iii. Microfinance banks should extend Correlation (PPMC) respectively. The their operational unit to the rural finding has it that there is a significant areas so as to bridge the gap correlation between the attitude of the between the formal and informal respondents and the use of alternative rural financial institutions. banking method in Oyo State. Lastly, iv. Government conventional financial there is significant but negative agencies should be at the reach of correlation which indicate the rural household to give them constraints encountered by respondents proximity for patronage.
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Amaoko, E. (2012): Informal Finance Network, Washington, DC, Prepared for Private Sector February. Development in Africa. Osuagwu l. (2002): Business Research, (Background paper prepared for Methods Principle and Practice, African Development Report). Grey resources Ltd., Lagos, Awoluyi, E. C. (2001):“Explaining the Nigeria. Stability of Informal Group Olutayo I.B. (2009) Poverty and System of Financial Income Diversification among Intermediation in Rural Nigeria: Household in Rural Nigeria; A An Empirical Analysis.” Journal Gender Analysis of Livelihood of Rural Cooperation, XXIII( 2): Pattern. Conference page No 41 105 – 111. of 2nd Institute de Estudos Socias Chavas, E. T & Alibar, A. L. (2 003): Economics (IESE) Conference on Voices of the Poor-Can Anyone Dynamics of Poverty and Patterns Hear Us? New York: Oxford of Economic Accumulation in University Press. Mozambique at Maputo, City Population (2017)- Statistics, maps Mozambique 22-23 April,2009. and Charts. Singh, D. (2002): Money Banking and https://www.citypopulation.de/ph Economic Analysis. Eaglewood p/nigeria- cliffs, N.J pretence hall standard, admin.php?adm1id=NGA031 India Friedman, A. S (2010): Financial Smith .G (2002): Money and Banking Institutions and markets 4th Financial Market and Institution. Edition Tata McGraw – Hill Pg 23. United nation (2004): publishing Company Ltd New United Nation Development Delhi Project. Administrative committee Laforet, E. & Li, C. (2005):“Explaining on coordination: poverty, the Stability of Informal Group economics and social issue. System of Financial Staschen, W. (2009). Tying odysseus to Intermediation in Rural Chaina: the mast: Evidence from a An Empirical Analysis.” Journal commitment savings product in of Rural Cooperation, XXIII( 2): the Philippines. The Quarterly 105 – 111. Journal of Economics, 121: 635-6 M-Pesa, C; Mbiti, F. & Weil, H (2011) Suoranta, S., and Matila, M. (2004). “An Introduction to Key Issues in Institutional determinants of Micro-Financial: Supervision and saving: Implications for low Regulation, financing Sources, income households and public expansion of Micro-finance policy. Journal of Socio- Economics, 28, 457-473.
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Impact of Good Governance and Entrepreneurship in Nigeria
Abubakar Faruk & Abolaji Jamiu Atobatele
Department of Public Administration, Ahmadu Bello University Zaria [email protected]
Abstract: Entrepreneurship is the springboard for any market enterprise and a sin-qua-non to development. The clarion call by governments of developing countries like Nigeria towards this subject matter is considered a worthy cause. Attempts have been made by the Nigerian government at encouraging and sustaining entrepreneurship among its teaming youth population. Programmes like YOUWIN, Youth Empowerment Scheme of NAPEP, SURE-P, SMEIDAN, etc, were developed by the federal government for this purpose. In spite of the presence of these initiatives, the spate of entrepreneurship in Nigeria is still below expectation considering the percentage of the unemployed. It is against this backdrop that the study seeks to examine the relationship between governance and entrepreneurship in Nigeria. The study made use of secondary sources of data like CBN reports and other government gazettes. With the aid of SPSS version 20, the data gathered was analyzed and the hypothesis tested using Pearson Correlation. It was revealed that Government has initiated policies which actually impacted on unemployment reduction although a large number of the opportunities granted were politicized. The study recommends that when grants are given for entrepreneurships, politicians should keep off from influencing what goes to who. Finally a policy document must be formulated to protect businesses in this category.
Keywords: Governance, Leadership, Ecology, Entrepreneurship, Business policy, Growth and Development
14 1.0 Introduction development lies in the productive Entrepreneurship is a springboard capabilities of entrepreneurship through through which many advanced creation of employment, achieving economies of the world achieve economic growth, adopting new economic and development growth. The technologies and innovation success of entrepreneurship in any capabilities. The importance of country of the world depends on the entrepreneurship cannot be over- seriousness of the government coupled emphasized, as it is part of mechanism with the good business policy. It is to propel the wheel of national believed by the people that in most of development which leads to growth in the advanced countries of the world, the economy through the adoption of their university graduates do not think modern technologies coupled with good of working in government or private business ecology which result to agencies but want to start their business economics of scale and help to reduce due to the enabling ecology created by the rate of youth unemployment. the leadership of their country in terms Since Nigeria independence in 1960, the of good business policy, provision and leadership of Nigeria have shown great easy accessibility to loan with a very concern the youth unemployment by low rate of interest etc. According to introducing series of schemes and Acs, Desai & Klapper quoted in projects such as Better Life Programme Friedman (2011) entrepreneurs in (BLP), Operation feed the Nation developed countries have easy access to (OFN) National Poverty Eradication incentives that will help to reduce the Programme (NAPEP), Youth Enterprise burden of entrepreneurial. with innovation in Nigeria (YOUWIN)
Friedman (2011) pointed out that the etc. by instituting agency such as small policies of certain countries and and medium enterprises development government directives can either agency to stimulate, monitor and enhance or hinders entrepreneurship. coordinate the development of the For example, China, over the last MSME sub-sector; initiate and articulate decade monitored the movement of her policy ideas for small and medium policies towards a free market economy enterprises growth and development; in some sectors of her economy and promote and facilities development these changes have brought increase in programmes, instruments and support her entrepreneurship. According to the services to accelerate the development World Economic Forum (WEF, 2017) and modernization of MSME America rose to second in the operations; serve as mechanism for rural entrepreneurship ranking. This is partly industrialization, poverty reduction, job due to lack of good economic policies creation and enhanced livelihoods link and weak productivity growth that have MSMES to internal and external sources affected rival countries such as China of finance, appropriate technology, and Europe. technical skills to large enterprises; promote and provide access to industrial However in Nigeria, government has infrastructures such as layouts, come to appreciate entrepreneurship as incubators, industrial park; intermediate one of the key factors that can help the between MSMEs and Government; country to achieve economic growth. working in contact with other Onah (2001) observes that governments institutions in both public and private have realized that the mechanism to sector to create a good enabling ecology
15 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) of business and introduction of capabilities of entrepreneurial entrepreneurship courses to the individuals. curricular of Nigerian higher institutions Knight (1921) observes that of learning . Supporting this view is entrepreneur changes uncertainty into a Tende (2014) in the last twenty years, calculable risk. Shane and government in developing countries Venkataraman quoted in Braunerhjelm have initiated a number of policies and (2010) assert that entrepreneurship is interventions that were geared towards defined as a person responsible for entrepreneurial capabilities through consequences opportunities to produce small and medium enterprises (SME) future goods and services that are development. But in spite of these discovered, evaluated and exploited” initiatives, the spate of entrepreneurship Odu quoted in Fadeyi, Oke, Ajagbe, in Nigeria is still below expectation Isiavwe and Adegbuyi (2015) suggest considering the percentage of the that employment policies and unemployed youths. It is against this programmes should have wider and backdrop that the study seeks to integrated approach with interventions examine the relationship between across multiple sectors at multiple governance and entrepreneurship in levels, by that the entrepreneurial Nigeria. policies will have impact on the Hypothesis economy. HO: Government policy does not have a Empirical Review of Related Literatures significant relationship with cost of Asogwa and Anah (2017) carried out a doing business in Nigeria. study on the Impact of Entrepreneurship 2.0 Review of Related Literature Development on Economic Growth of According to Asogwa and Anah (2017) Enugu State: A study of Registered the word “entrepreneur” is derived from Entrepreneurs in Enugu State, Nigeria. the French verb entreprendre which The study adopted survey research means to undertake. Economic scholars design of which structured from time of Adam Smith, through the questionnaires were administered to the neoclassical era, the English Economist, sample drawn from the population of the American Economist down to the the study. The data collected were German School all have their various analyzed with Chi-Square. The study perspective of the role and function of found out that through entrepreneurship, entrepreneur in economic development. standard of living of the people of There is agreement however that Enugu state have increased and creation of wealth is not a function of concludes that the role of land, labour and capital alone. While the entrepreneurship plays major roles in importance of these basic productive ensuring economic development factors is recognized, more important is because its impact on the socio- the role of the entrepreneur or the economic well-being of the people. The organizer. study therefore recommends that the
Schumpeter (1934) stresses that government should resuscitate the entrepreneur is the mechanism through initiated programmes (Micro Finance which economy leaves static Bank, Bank of Industry etc.) by equilibrium, based on the combinatorial appointing men of integrity and those that have passion for entrepreneurship
16 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) as the head of this programmes. The data available, not by a probability short coming of this study is the use of criterion. Chi-Square to measure the impact when Another limitation has to do with the the authors can actually use Regression method of statistical analysis which Analysis and also Micro Finance Bank relies on the standard OLS Regression and Bank of Industry are not dead. rather than on the more robust, quintile
Wiklund, Davidson, Audretsch & regressions on even panel data analysis.
Carlson (2011) conducted a study on the Braunerhjelm (2010) carries out a Future of Entrepreneurship Research. research on Entrepreneurship, The study found out that while the Innovation and Economic Growth. The previous decade in the future may be study found out that the country‟s viewed as a golden age of ability to increase its wealth and welfare entrepreneurship scholarship, it is far over time critically lies on its abilities to from certain that the break taking pace development and exploit, thereby of development in the scholarly field of enhancing growth. The limitations of entrepreneurship research will continue this study include lack of methodology indefinitely into the future. One of the and recommendation. main questions or controversies that Fadeyi, Oke, Ajagbe, Isiavwe and only grows more acute over time Adegbuyi (2015) conducted a study on involves the question of legitimacy as a the Impact of Youth Entrepreneurship in bona fide separate and individual field Nation Building. The study employs or rather as a topic of research in the survey research by randomly selecting more traditional fields. The study 40 upcoming entrepreneurial firms concludes on a positive notes, proposing across section of a population of firms that future entrepreneurship scholarship located across Yaba Local Government indeed has the potential of dealing with Area of Lagos State. Also a simple the issues that are central to the random sampling technique was used, development of the world. the study found out that there is a Sanda, Mikailu & Garba (2005) significant relationship between conducted a study on the Corporate competition, growth and development Governance Mechanisms and Firm of entrepreneurial firms in Nigeria. The Financial Performance in Nigeria. The study also found out that youth study adopted ordinary least square entrepreneurship will have impact on regression analysis for a sample of 93 the growth of national economy of firms quoted on the Nigerian Stock Nigeria if the government can support Exchange for the period 1996-1999. The them. The study therefore recommends study found out that there is no evidence that if government wants to record feat to support the idea that boards with in the future growth of the youth increase in the number of outside entrepreneurship in Nigeria, it has to directors perform better than other introduce entrepreneurial course into firms, the result shows that firms run by our educational system to make it more foreign CEOs achieve higher levels of robust, relevant and need-oriented and performance than those run by driven. The study failed to indicate the indigenous CEOs. The limitation to this method used to arrive at its sample size study are: the sample was derived by from the population sampling.
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Tende (2014) conducted a study on the and domestic investments. The study Government Initiatives toward failed to give a comprehensive Entrepreneurship Development in statement of the problem. Also the Nigeria. A random sample of 1,159 statement of problem should contain the beneficiaries of EDP-NDE programs ideal situation and the reality but on the were selected and structured study there is no ideal situation and a questionnaires were used to obtain comprehensive reality. information from the selected EDP- 2.1 Nexus between Good Governance NDE beneficiaries. The result shows and Entrepreneur that the government credit policies and The sensitivity of leadership to the well- programmes did not have significant being of her citizenry influences the effect on the development of growth of entrepreneurship in any entrepreneurial beneficiaries of the country. The importance of good EDP-NDE program. The study therefore governance cannot be over-emphasized recommends that governments should to the growth of entrepreneur. Good execute laws and regulations that will to governance determines the rate at which interaction between institutional unemployment is dealt with, most development and the entrepreneurial especially in terms of engaging endeavor and to create an enabling unemployed youths in economic environment that will stimulate activities through self-reliance. entrepreneurs to initiate business and Kaufmann et al quoted in Ha, Chan, & new ventures. The study failed to use Hieu (2016) „‟observe that governance the correct population sampling method is the process by which governments are to get the sampling size. The study selected, monitored and replaced; the should have used either Yamane, capacity of the government to Krejicie and Morgan formulae or table effectively formulate and implement etc. The result of the study is not a good sound policies and the respect of representation of the Nigerian Youths citizenry and the state for the because only two geo-political zones institutions that govern economic and were considered out of six. social interactions among them‟‟. Agada and Pius (2014) conducted a Governance was given attention to research on Entrepreneurship towards the end of the twentieth century Education: A Prerequisite for as a result of the activities of donor sustainable National Development. agencies, social scientists, Library research technique was philanthropists and civil society. employed in gathering data. The study Governance became popular because it reveals that entrepreneurship involves the process of managing public development can help in achieving self- and private affairs. According to United employed, self-reliant and contribute Nation (UN) (2006) the term immensely to the growth of national governance illustrates what is expected economic and social development. The from government in terms of duties. In study recommends that government addition at the end of the cold war the should create good business use of governance became popular with environment that is devoid of insecurity donor agencies such as the World Bank, for entrepreneurship to thrive International Monetary Funds (IMF) favourably leading to increase in foreign and Western Countries which urged the
18 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) countries of the former Union of Soviet great concern towards entrepreneurship Socialist Republics and the developing by formulating and implementing series world to undertake political, economic of policies and schemes such as and administrative transformation and to NAPEP, YOUWIN etc. geared towards practice good governance (UN, 2006) the growth and stimulation of
UNDP quoted in UN (2006) defined entrepreneurship but in spite of these governance as „‟ the exercise of policies and schemes the rate of growth economic, political and administrative of entrepreneurship has not recorded authority to manage a country‟s affairs monumental increase. However many at all levels. It comprises the researchers have argued that the reason mechanisms, processes and institutions for decline in the entrepreneurship can through which citizenry and groups be attributed to the unfavourable articulate their interests, exercise their business environment and policies legal rights, meet their obligations and emanating from corrupt practices of the mediate their differences‟‟ leadership found everywhere.
Good governance entails strict Supporting this view is the Guardian leadership that is sensitive and Newspaper (2017) the UNIDO responsive to the yearning of the people Representative to ECOWAS and there by instituting appropriate laws and Regional Director, Nigeria Regional measures to achieve socio-economic Office Hub Mr Jean Bakole revealed who is development. According to that the Nigeria is one of the countries NATO (2010) „‟Good governance is where business is most difficult to do. based on separation of powers of the Also, Quartz (2015) observe that‟‟ parliament, executive and judiciary Nigeria, Africa‟s largest economy has branches of government. The separation long be touted as one of the continent‟s of powers should provide an effective most promising business hubs. In the system of checks and balances that first quarter of 2015, foreign direct curtail and arbitrary or unilateral investment inflow surpassed $700 exercise of power by any one branch of million and even though investor government together with impartial, confidence is shaky given the reliable and predictable public uncertainty during and since the 2015 administration under rule of law. Good elections. But despite offering so many governance creates an environment opportunities, Nigeria remains one of where defence establishments are the worst countries to do business as instilled with culture of integrity that data from the World Bank Doing rejects corruption.‟‟ Business report shows. The report ranks Amoros and Bosma quoted in Ha et al Nigeria 169th out of the 189 in consideration-essentially unmoved from (2016) argue that entrepreneurs are th driven to start up their business by rank 170 in 2014. Nigeria ranked 39th among the listed African countries.‟‟ demand and supply motivations in order to better understand the entrepreneurial In Nigeria many small and medium phenomenon. In other words the success scale business do not reach maturity of entrepreneurship in a country stage before they die due to increase in depends on the sound policies direction the cost of production which is mostly of the government. In Nigeria, caused by epileptic power supply etc. government over the years have shown Also in the word of ILO (2009)
19 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) entrepreneurship education is times they were working in a regular increasingly being recognized as an job. These efforts are referred to as important element in the broader efforts „opportunity entrepreneurship reflecting to tackle the global youth employment the voluntary nature of participation. In challenges. National Labour Markets‟ contrast about 43% (i.e 63 million capacity to absorb the increasing people) reported they were involved numbers of new and young entrants as because of they had „no better choices well as provide decent and productive for work‟ such effort is referred to as „ employment opportunities is far from necessity entrepreneurship‟ reflecting to sufficient. New strategies which include the individuals‟ perception that such an increased focus on entrepreneurship actions presented the best option are needed to better prepare the youths available for employment but not for the transition from school to work. necessarily the preferred option.‟‟
2.2 Entrepreneurial Activities and 3.0 Research Methodology Perspectives of the Entrepreneurs This study employs a survey research Entrepreneurship helps to achieve design with structured questionnaires growth in the economy most especially designed and administered to a sample in a country where good governance is of three hundred and eighty four drawn maximized. According to Global from the population of 160 million as Entrepreneurship Monitor (2001) estimated by 2006 population census. „‟about 54% (i.e 80 million people) of Data collected were analyzed with those involved in creating and growing Pearson‟s correlation using SPSS. The new firms claimed that they were sample size for the study is 382 going pursuing a business opportunity for by Krejcie and Morgan (1970) personal interest, often at the same technique for determining sample size.
Entrepreneurship ability has helped you to meet the need of your family
Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 156 39.1 39.1 39.1 Disagree 115 28.8 28.8 67.9 Neutral 46 11.5 11.5 79.4 Valid Agree 54 13.5 13.5 93.0 Strongly Agree 28 7.0 7.0 100.0 Total 399 100.0 100.0
Self –employed business come into being as a result of the interest I have in commerce
Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 115 28.8 28.8 28.8 Disagree 159 39.8 39.8 68.7 Neutral 60 15.0 15.0 83.7 Valid Agree 41 10.3 10.3 94.0 Strongly Agree 24 6.0 6.0 100.0 Total 399 100.0 100.0
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Setting up of business outfits in Nigeria do not require much effort Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 188 47.1 47.1 47.1 Disagree 154 38.6 38.6 85.7 Neutral 30 7.5 7.5 93.2 Valid Agree 11 2.8 2.8 96.0 Strongly Agree 16 4.0 4.0 100.0 Total 399 100.0 100.0
Federal Government has always shown interest in entrepreneurship Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 109 27.3 27.3 27.3 Disagree 174 43.6 43.6 70.9 Neutral 45 11.3 11.3 82.2 Valid Agree 46 11.5 11.5 93.7 Strongly Agree 25 6.3 6.3 100.0 Total 399 100.0 100.0
Government supported entrepreneurship by making soft loan available
Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 109 27.3 27.3 27.3 Disagree 160 40.1 40.1 67.4 Neutral 59 14.8 14.8 82.2 Valid Agree 22 5.5 5.5 87.7 Strongly Agree 49 12.3 12.3 100.0 Total 399 100.0 100.0
Government policies have helped to consolidate entrepreneurship in Nigeria Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 120 30.1 30.1 30.1 Disagree 119 29.8 29.8 59.9 sNeutral 43 10.8 10.8 70.7 Valid Agree 55 13.8 13.8 84.5 Strongly Agree 62 15.5 15.5 100.0 Total 399 100.0 100.0
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Government has shown responsibility to ensure that small scale and medium scale business grow in Nigeria by providing amenities Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 124 31.1 31.1 31.1 Disagree 197 49.4 49.4 80.5 Neutral 53 13.3 13.3 93.7 Valid Agree 8 2.0 2.0 95.7 Strongly Agree 17 4.3 4.3 100.0 Total 399 100.0 100.0
Small and Medium Scale Business thrive well in rural areas because of the government presence in the rural areas Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 159 39.8 39.8 39.8 Disagree 189 47.4 47.4 87.2 Neutral 32 8.0 8.0 95.2 Valid Agree 10 2.5 2.5 97.7 Strongly Agree 9 2.3 2.3 100.0 Total 399 100.0 100.0
Cost of establishing small and medium scale business is very low because of government positive intervention Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 127 31.8 31.8 31.8
Disagree 173 43.4 43.4 75.2 Valid Neutral 52 13.0 13.0 88.2 Agree 9 2.3 2.3 90.5 Strongly Agree 38 9.5 9.5 100.0 Total 399 100.0 100.0
Government has been very faithful with her entrepreneurship schemes and programe Frequency Percent Valid Cumulative Percent Percent Strongly Disagree 187 46.9 46.9 46.9 Disagree 163 40.9 40.9 87.7 Neutral 16 4.0 4.0 91.7 Valid Agree 4 1.0 1.0 92.7 Strongly Agree 29 7.3 7.3 100.0 Total 399 100.0 100.0
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Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .490a .360 .347 .55420 a. Predictors: (Constant), IV
ANOVAa Model Sum of Df Mean F Sig. Squares Square Regression 4.559 1 4.559 14.845 .000b 1 Residual 121.932 397 .307 Total 126.491 398 a. Dependent Variable: DV b. Predictors: (Constant), IV
Coefficientsa Model Unstandardized Standardized t Sig. Coefficients Coefficients B Std. Error Beta (Constant) 1.678 .102 16.392 .000 1 IV .175 .045 .190 3.853 .000 a. Dependent Variable: DV
Result and Analysis the level of Alpha that will be used for This study employed a survey research this study is 0.05%. Since the level of design, structured questionnaires Alpha (0.05) is greater than the P-Value designed were administered on the (.000) therefore this study rejects the sample of 382 .The Adjusted R squared null hypotheses that state that “Ho: is 0.347 which means that 34% of the Government policies do not have variation in the dependent variable significant relationship with cost of (Entrepreneurship) is explained by the doing business independent variables. The remaining The study reveals that government has 66% are variables that were not made herculean effort at reducing the explained in the study. The assumption incidence of unemployment through the under the test procedure is that when P- mechanism of entrepreneurship but Value is less than 0.05 the null despite this feat, the impact of proposition is invalidated else, the study government in terms of good business fails to reject the null proposition if P- policy and financial responsibility has Value is greater than 0.05. The level of not been felt by the majority of the Alpha measures the degree of citizenry. Supporting this view is significance that will be assigned to Guardian Newspaper (2017) committing type one or two error. Thus where 0.05 (95%) level of Alpha is Also it was found out that most of used, it means there is 95% assurance of schemes initiated by government geared not committing any of the error. Hence towards self-employment were good but they were politicized such that the
23 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) financial benefit did not go to those that be controlled by the government not the needed it. politicians. This study therefore Government has not done much in the recommends that government should area of assessing loans from the banks collect data on unemployed persons and without stringent conditions and higher startup capital should be given to them rate of interest. through the ministry of finance, trade
4.0 Conclusion and Recommendation and commerce in each state. Also, From the above it has become clear that giving of entrepreneurial grants by good governance has impact on government should not be politicized, entrepreneurship but the Nigerian but based on sound business plans. government has not done much to Government should ensure that there is ensure that these schemes geared provision of infrastructural facilities that towards self-employment that will will woo investors from all over. reduce unemployment are supposed to
References Entrepreneurship in Nation Agada, J.A.A & Pius, E.J.B (2014) Building. International Journal of Entrepreneurship Education: A Academic Research in Public Prerequisite for Sustainable Policy and Governance. 2(1) National Development. Journal of Friedman, B.A (2011) Relationship Good Governance and between Governance Sustainable Development in Effectiveness and Entrepreneur. Africa (JGGSDA) 2(3) December, International Journal of 65-77 Humanities and Social Sciences Asogwa, O.S & Anah, S.A (2017) 1(17) Special Issue-November Impact of Entrepreneurships Ha, T.T: Chan, N.N & Hieu, N.T (2016) Development on Economic Impact of Governance on Growth of Enugu State: A study Entrepreneurship Development in of Registered Entrepreneurships ASEAN+1 Countries: Evidence in Enugu State, Nigeria. from World Bank Datasets. International Journal of Modern Economy, 515-525, Economics, Business and http://www.scirp.org/journal/me.h Management Research, 1(2) ttp://dx.doi.org/10.4236/me.2016. Braunerhjelm, P (2011) 75056 Entrepreneurship, Innovation and Knight, F (1921) Risk, Uncertainty and Economic Growth: Profit Library of Economics and Interdependencies, Irregularities Liberty. and Regularities in D.B http://www.econlib.org/library/kn Audretsch, O. Flack, S. Heblich & ight/knRUP.html A. Lederer (eds.) Handbook of NATO (2010) Research on Innovation and Onah, F (2001) Urban Unemployment Entrepreneurship. 161-213, Situation in Nigeria in: E Ezeani, Cheltenham: Edward Elgar N Elekwa (eds) Issues in Fadeyi, O: Oke, A.O: Ajagbe, M.A: Urbanization and Urban Isiavwe, D.T & Adegbuyi, A Administration in Nigeria. (2015) Impact of Youth University of Nigeria, Nsukka,
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Enugu, Nigeria. Jamo Enterprises Tende, S.B.A (2013) Government 154-167 Initiatives toward Sanda, A: Mikailu, A.S & Garba, T Entrepreneurship Development in (2005) Corporate Governance Nigeria. Global J Bus Res, 8(1) Mechanisms and Firm Financial 109-120 Performance in Nigeria. African United Nation (2006) Economic Research Consortium Wiklund, J: Davidson, P: Audretsch, D Schumpeter, J (1934) Theory of and Carlson, C (2011) The Future Economic Development: An of Entrepreneurship Research. Inquiry into Profits, Capital, Entrepreneurship Theory and Interest and Business Cycle, Practice, 35, 1-9, Cambridge, M.A; Harvard http://dx.doi.org/10.1111/j.1540- University Press 6520.2010.00420.x World Entrepreneurship Forum (2017)
25 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Entrepreneurship Education and Orientation as Performance Driver in Small and Medium-Scale Enterprises
Dr. James Nwoye Obi
Covenant University, Ota Department of Business Management e-mail: [email protected]
Abstract: Entrepreneurship education and orientation exposes students to the fundamental knowledge required for running a business successfully. Entrepreneurship education was introduced into Nigerian educational curriculum by the Federal Government of Nigeria in 2006 to enable youths acquire basic skills and knowledge for opening up their own small businesses. It finds expression in developing the foresight of the entrepreneur and his ability to take advantage of business opportunities unfolding in the business environment to create competitive value. Entrepreneurship education is one of the intervention strategies in line with global trend to refocus education towards solving the unemployment problem facing the world today. Descriptive research design was adopted in this article. Structured questionnaire was used to gather primary data for the study. A total of 60 questionnaires were administered to employees of Astral Water Limited, Surulere, Lagos. However, only 53 questionnaires were correctly completed and returned to the researcher. Data collected through the questionnaires were analyzed with regression and ANOVA test statistics using the Statistical Package for Social Sciences (SPSS) version 16. Two (2) hypotheses were formulated and tested in the study. The test showed that the null hypotheses of the two formulated hypotheses were rejected. The test of the two hypotheses provided resounding evidence to prove that entrepreneurship education and orientation serve as performance driver in small and medium-scale enterprises operating in Nigeria. The study recommended that entrepreneurs should re-double their effort on the acquisition of entrepreneurship education and skills to make superior performance sustainable.
Key words: Entrepreneurship skills, business orientation, education, profitability, sustainability
26 Introduction the discussion on entrepreneurship by Entrepreneurship education has looking at the entrepreneur as a pioneer continued to attract increasing attention in whom the success and/or failure of in both industry and the academia due to the enterprise repose. For this reason, its importance in the success of the entrepreneur must possess basic entrepreneurs. The success of education and strong business entrepreneurs and their business have orientation to make the business a the potential to create new employment success. opportunities in the society thereby Conceptual Clarification reducing the nagging problem of Entrepreneurship is largely the activity unemployment and mounting social ills of creating, commencing and growing pledging our society today. In many an enterprise. It embodies assembling developing countries of the world, the entrepreneurial paraphernalia which knowledge, skills and competence of the includes gathering resources, entrepreneur have been identified to be capabilities and human skills and taking essential to the success of the small and advantage of opportunities in the medium-scale enterprises (SMEs). business environment to make a success Authors have considered of the business (Akpan and Effiong, entrepreneurship education and 2012). Entrepreneurship education and orientation to be important to the orientation empowers the entrepreneur successful management and operation of with skills and knowledge to make a SMEs (Adidu & Olanye, 2006). Small success of his undertakings. The art of businesses form the hub of economic entrepreneurship has been recognized as activities through the absorption of essential for the success of small and productive resources at all levels of the medium scale enterprises and economic economy. Araba (2012) observed that growth of the nation and ultimately entrepreneurship in developing having salutary effect on the standard of countries is the initiative of the living of the people. The activities of entrepreneur to muster courage and entrepreneurs and the establishment of resources to start up a new business. In small and medium-scale enterprises in addition, the realization that sufficient the society provide job opportunities to level of entrepreneurship activities the teeming population of young people greatly boosts economic growth is thereby stimulating industrial activities encouraging the government to take and energizing the market economy increasing interest in entrepreneurship (Ikechukwu, 2014). in the country. (Thaddeus, 2012). As earlier mentioned, entrepreneurship Oborah (2013) came out with education was introduced in 2006 by the hypothesis that characterized the Federal Government of Nigeria through entrepreneur as a person who accepts the National Universities Commission. risks, by purchasing at a specific cost The aim is to empower young graduates and offering at an uncertain price. In to be in position to establish their own the period of Industrial Revolution in small business upon completion of their the 1830s, Jean Baptiste extended the programme. Entrepreneurship meaning of an entrepreneur to education is one of the intervention incorporate the possession of strategies in line with global trend to administrative abilities by the refocus university education to combat entrepreneur. Other writers like Joseph unemployment plaguing the world Schumpeter made useful contribution to
27 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) today. Entrepreneurship education is entrepreneurial knowledge and skills. also aimed at contributing to economic Ayegba and Omale (2016) defined growth and national development, entrepreneurship education as the extent raising the standard of living of the to which the education system is people and making our young people effective in providing instruction and (university graduates and non- experience in the creation and graduates) job-creators rater than job- management of small and medium-scale takers (Oni and Daniya, 2012). enterprises.
The Concept of Entrepreneurship Entrepreneurship orientation involves Education and Orientation an entrepreneur having foresight about Education has been defined as the changes in the business environment theory of teaching and imparting and responding to them to create knowledge and skills to learners in a competitive value which will impact on particular area of study (Obarah, 2013). performance. Entrepreneurship Entrepreneurship education was first orientation may be the most effective initiated in Japan by Shigeru Fiji who way of achieving superior performance began teaching courses in the field of by entrepreneurs in terms of recording business and entrepreneurship in 1938 higher sales volume and increased at Kobe University (Thaddeus, 2012). profitability. It must be noted that in the In similar move, Mace introduced the world of business, people can exhibit first entrepreneurship course in the different orientations. Apart from United States of America at the Harvard entrepreneurship orientation, other Business School in 1947. Fifty years orientations may include; market from this period, entrepreneurship orientation, cultural orientation, education gained universal recognition customer orientation and technology (Thaddeus, 2012). orientation.
According to Shane and Venkataraman The Five Stages of Entrepreneurship (2000), entrepreneurship education is Education the deliberate intervention of a teacher Entrepreneurship education is the life- in the life of a learner to impart in him long learning process which proceeds essential entrepreneurial skills that will through at least five distinct stages of enable the learner to survive in the development (Consortium for business world. Entrepreneurship Entrepreneurship Development, 2004). education is also defined as the process The five stages include the following; of diffusing and communicating the basics, competence awareness, entrepreneurial capabilities and creating creative application, start up, and mental awareness and providing skills growth stages. Entrepreneurship required by a person for the art of education is the process of providing starting up and developing their growth- individuals with the ability to recognize oriented businesses (Boohene et al commercial opportunities and the 2012). Some attributes of knowledge, attitude and skills to act on entrepreneurship education include them successfully. Ilegbinosa and adjustment in entrepreneurial values, Jumbo (2015) looked at transformation in orientation towards entrepreneurship education from the entrepreneurship career as well as trends perspective of a tripod which stands on towards personal assessment of motivation, business skills and
28 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) foresight. Human beings have Entrepreneurship education enhances behaviour, attributes and skills which the spirit of leadership and gives the can be developed through individual self-confidence. It fosters the entrepreneurial learning. The process drive for self-achievement and entails deliberate and intentional positively influences entrepreneurial mediation of a teacher in the life of the and managerial attitude and perception learner to bestow in him entrepreneurial as well as alleviating the fear of failure qualities and aptitudes to empower the in business. learner to survive in the business world. Entrepreneurship Education and Oriazowanlan (2013) characterized Performance of Small and Medium- entrepreneurship education as the scale Enterprises organized and formal transmission of Relationship exists between entrepreneurial capabilities which entrepreneurship education and include; skills, ideas and mental performance of small and medium-scale awareness utilized by people amid the enterprises (SMEs) in the society. It is process of beginning and building up widely believed that entrepreneurship their growth-oriented ventures. education is essential for the success of Notable writers in the field of the entrepreneur and the growth of entrepreneurship have been able to SMEs. Studies have established the prove that entrepreneurship can actually positive relationship between be learnt just like any educational entrepreneurship education and discipline. In 1985, Peter Drucker, a performance of SMEs leading to guru in the field of management employment generation and thinking stated that entrepreneurship empowerment of disadvantaged itself is not magic, it is not a mystery segment of our population which and it has nothing to do with one‟s include the poor rural dwellers and the genes. According to Drucker, woman. Economic down-turn of the entrepreneurship can indeed be taught past decade led to a renewed interest in and be learnt. This statement validates entrepreneurship and the establishment the need for entrepreneurship education of new businesses. as a solution to unemployment and slow The performance of small and medium- economic growth in Nigeria. The scale enterprises (SMEs) is of interest to consortium of Entrepreneurship all countries whether developing or Education (2004) stated that effective developed. This is mainly because of entrepreneurship education creates room the critical roles played by these for people to access the required skills businesses in the economic development and knowledge that are necessary to of any country. The performance of an build and grow an entrepreneurial organization or business enterprise venture. The goal of entrepreneurship relates to the efficiency and education is to prepare responsible and effectiveness with which it carries out enterprising individuals who can take on the tasks in the process of providing risks, manage results and learn from products and services (Oni and Daniya, outcomes. Entrepreneurship education 20120). enables owners of small and medium- Oborah, 2013) admits that there is no scale enterprises to learn how to prevent consensus on appropriate measures of and solve business problems. the performance of SMEs and prior
29 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) research had focused on variables for entrepreneurs thus preparing them to be which information was easy to gather. enterprising individuals who would It has also been argued that growth is a become entrepreneurial thinkers and more accurate and easily accessible contribute to sustainable economic performance indicator than any other development. It is also the objective of accounting measures and hence superior entrepreneurship education to encourage to indicators of financial performance. creative thinking and promote a strong SMEs performance is indicated by sense of self-discipline and changes in profits, growth in sales and accountability. also employment generation. Entrepreneurship knowledge and Oriazowanlan, 2013) is of the view that abilities are basic assets for the improved performance of SMEs ensures achievement of success in higher profits, higher growth in sales entrepreneurship undertaking. and employment and wealth Entrepreneurship training has been maximization of the owners. driven particularly by scholastics, Oborah (2013) pointed out that business pioneers, entrepreneurs and in performance is multidimensional in addition government authorities looking nature and that it is advantageous to for leeway in a globalized world integrate different dimensions of (Thaddeus, 2012). Ayeduso (1997) performance in empirical studies of outlined three main sources that demand entrepreneurial education. It is possible entrepreneurship education. The to regard financial performance and sources are; the government, students sustainable growth as different aspects and the business world. The of performance because each reveals government expects entrepreneurship important and unique information. education to contribute to job creation, Akpan and Effiong (2012) argued that economic growth, skills enhancement there is no consensus on appropriate and the development of entrepreneurial measures of the performance of SMEs culture which will ultimately eradicate and that prior research focused on poverty. Businesses, on the other hand, variables for which information was expect entrepreneurship education to easy to gather. develop a general understanding of
Objectives of Entrepreneurship basic business issues, creative work Education and Orientation attitudes and an entrepreneurial Entrepreneurship education tries to approach among learners. Such learners prepare people to be responsible, to take expect entrepreneurship education to calculated risks, manage the business assist them in their quest for knowledge effectively and to learn from past errors and savvy to start new ventures and to and mistakes. The main objective of develop skills that will enable them to entrepreneurship education is to manage their own business successfully. enlighten and foster the emergence of Practicing entrepreneurs expect news entrepreneurs who can come up entrepreneurship education to help them with new ideas, new ventures and new solve the unique problems in their perspectives (Onyesom & Uwaifo, businesses. Forward-looking 2013) and (Ingram, 2010). entrepreneurs seek to grow their Entrepreneurship education seeks to businesses, control large market share instruct and educate young and maximize their profitability.
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Benefits of Entrepreneurship opportunities and cash in on such Education opportunities through the It has been argued that for entrepreneurs development of new ideas and to obtain and develop entrepreneurial effective ways of deploying competencies, they may need to develop resources for business success. themselves through entrepreneurship Challenges Confronting education which is fundamental to the Entrepreneurship Education successful running of small scale Even though entrepreneurship education businesses in today‟s business is being promoted in Nigeria and other environment. Entrepreneurship parts of the world as the medium of education has many other benefits and eradicating poverty, there are still some of the major ones are discussed notable barriers to effective below: entrepreneurship education and (a) Entrepreneurship education plays a entrepreneurship practice. The crucial role in elevating the level of challenges that confront Nigeria as far awareness of the nature and as entrepreneurship education is importance of entrepreneurship concerned include the following: itself to the economic growth of (a) Unsuitable learning methodologies the nation. (b) Entrepreneurship is not adequately (b) It equips prospective entrepreneurs promoted as a career option since with practical skills and knowledge the educational system naturally to float a new small scale business promotes other disciplines more and make a success of the venture. than entrepreneurship. (c) It develops and inculcates (c) Majority of the educational entrepreneurship culture in the programmes are not skill young people of a country. development based and therefore, (d) It develops new business mindset they are not serving the full in people thus providing the zeal purpose of entrepreneurship. for them to start of new businesses. (d) Complete lack of the basic (e) It also demonstrates to the business entrepreneurial elements in the world that entrepreneurs can be education system.
made not necessarily born. Theoretical Framework (f) Entrepreneurship education has the Resource-Based Theory (RBT) ability to greatly boost the intrinsic A number of theories were reviewed to motivation and self-confidence of determine which is pertinent to the both emerging and existing study of entrepreneurship education entrepreneurs. and orientation and its effect on the (g) It reduces the risk that performance of small and medium-scale entrepreneurs may likely face by enterprises (SMEs). The study found teaching them how to recognize the Resource-based theory as most problems and advance solutions to relevant. them. The proponent of resource-based theory (h) Entrepreneurship education was Edith Penrose in 1922. She was endows individuals with strongly of the views that knowledge and skills. Among competitiveness of a firm depends others, the ability to recognize largely on the resources available to it.
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(Thaddeus, 2012). The resource-based competitive advantage especially when theory (RBT) views entrepreneurship they are able to create value-adding education and orientation as the source strategies that is difficult to imitate by of knowledge acquisition and skills competitors. Resource-based approach mastery which are critical human to entrepreneurship education and resources needed by an organization to orientation emphasizes other component register superior performance. RBT orientations that have to do with describes a firm in terms of the improvement in the performance of a resources that the firm has and can firm. Such component orientations combine effectively to produce include; employee orientation, learning maximum value for the enterprise. orientation and technology orientation Sometimes, a firm achieves superior (Adidu and Olanye, 2006). performance, not because it has When resources and capabilities are enormous resources but for the fact that utilized effectively, they provide good it has distinctive competences that help basis for formulating competitive her to make better use of the available strategies in an organization (Onyesom physical resources. In the dynamic & Uwaifo, 2013). There is currently an world, firms are constantly creating new increasing interest in the role of firm‟s combinations of capabilities while their internal resources serving as the basis competitors are also improving their for a firm‟s competitive advantage. The own competencies and exploring new view is extended to the fact that the markets. According to Aliu and Ibe capabilities for achieving the growth (2013), there is the need to focus on and superior performance of a firm can internal resources and processes and be found inside the firm which are, by adopt the best of strategies in order to implication, the internal resources and coordinate the internal competences of this will bring about competitive the firm. The advantage of this when advantage. applied to small and medium-scale With respect to harnessing internal enterprises (SMES) is that they will be processes such as assets, marketing in a better position to harness their factors and management capability, internal resources such as the skills of attention should be given to their employees, managers the technological resources as an important entrepreneur and technology to achieve factor for increasing sales growth, superior performance. diversification and ultimate The development of Resource-Based improvement in the over-all Theory (RBT) has made it possible for performance. organizations to understand how to According to Akarue and Adogbeji deploy their internal resources to (2013), managers of SMEs must choose achieve sustainable competitive suitable strategies to enable them use advantages. Traditional researchers on effectively the internal resources and RBT notably Oborah (2013)were of capabilities to the best advantage. SMEs strong view that when firms produce have potentials that can be explored and goods and services that are highly used to advantage when they adopt valuable, exceptional and inimitable proper entrepreneurship education which does not have close substitute, orientation with the aim of improving they will command unbeatable skills, knowledge and competencies of
32 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) the workforce. The resource-based study. A total of 60 questionnaires were view is relevant to SMEs because the administered to employees of Astral small businesses have the tendency to Water Limited, Surulere, Lagos adapt or reshape their resources to However, only 53 questionnaires were satisfy changing needs in the business correctly completed and returned to the environment compared to large firms researcher. Data collected through the that will need several months to make questionnaires were analyzed with such changes and adjustments regression and ANOVA test statistics (Ilegbinosa & Jumbo, 2015). using the Statistical Package for Social
Methodology Sciences (SPSS) version 16. Two (2) The objective of this study was to hypotheses were formulated and tested examine the extent to which in the study. The test showed that the entrepreneurship education and null hypotheses for hypotheses one and orientation serve as the driver of two were rejected. Thus the result of the performance in small and medium scale test provided resounding evidence to enterprises in Nigeria. prove that entrepreneurship education Descriptive research design was adopted and orientation serve as performance in this article. Structured questionnaire driver in small and medium-scale was used to gather primary data for the enterprises operating in Nigeria.
Table 1: Analysis of Questionnaire Response Rate
Questionnaire Number of Respondents Percentage Returned 53 88.3% Withheld 7 11.6% Total Distribution 60 100% Source: Field Survey, 2018
Demographic Characteristics of Respondents Table 2: Respondents‟ Gender Frequency Percent Valid Cumulative (number of Percent Percent Respondents) Valid Male 24 45.3 45.3 45.3 Female 29 54.7 54.7 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
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Masculine gender constitutes the higher figure of respondents at 24. Table 3: Respondents‟ Age Frequency Percent Valid Cumulative Percent Percent Valid 25-35 yrs 30 56.6 56.6 56.6 36-55 yrs 23 43.4 43.4 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
Respondents within the age bracket of 25-35) are greater at 30.
Frequency Percent Valid Cumulative Percent Percent Valid Single 27 50.9 50.9 50.9 Married 26 49.1 49.1 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
Greater number of respondents in the study are not married showing a figure of 27.
Table 5: Respondents‟ Academic Qualification Frequency Percent Valid Cumulative Percent Percent Valid WASC. 21 39.6 39.6 39.6 HND/B.Sc. 20 37.7 37.7 77.4 MBA/M.Sc. 12 22.6 22.6 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018 The workforce of the firm is dominated by people with lower level of education at WASC level which showed a figure of 21
Table 6: Respondents‟ Position in the Organization Frequency Percent Valid Cumulative Percent Percent Valid Juniors 21 39.6 39.6 39.6 Supervisors 25 47.2 47.2 86.8 Managers 7 13.2 13.2 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
In the strength of the workforce as are 25 and junior workers 21). This is shown in table 6, supervisors are greater due to the fact that distribution of the than the junior workers. (Supervisors finished products of the firm requires
34 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) people who are a bit educated at the Table 7: Research Question 1 level of supervisors to successfully Can Entrepreneurship education and interact with clients and customers and orientation serve as performance driver sell the company‟s products. in small and medium-scale enterprises . Analysis of Research Questions (SMEs) operating in Nigeria?
Frequency Percent Valid Cumulative Percent Percent Valid Strongly Disagree 5 9.4 9.4 9.4 Disagree 6 11.3 11.3 20.8 Undecided 5 9.4 9.4 30,0 Agree 29 54.7 54.7 84.9 Strongly Agree 8 15.1 15.1 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
Total number of respondents that agreed and strongly agreed is 37.
Table 8: Research Question 2 (SMEs) in Nigeria if the cost of Can entrepreneurship education and acquiring knowledge and skills is higher orientation be inimical to the prosperity than the annual sales volume of the of small and medium-scale enterprises business?
Frequency Percent Valid Cumulative Percent Percent Valid Strongly Disagree 2 24.5 24.5 24.5 Disagree 12 32.1 32.1 2056.6 Undecided 9 17.0 17.0 73.6 Agree 13 22.6 22.6 96.2 Strongly Agree 17 3.8 3.8 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
Total number of respondents that agreed and strongly agreed is 30.
Table 9: Research Question 3 the standard of living of people in the Can entrepreneurship education and society? orientation lead to the improvement of
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Frequency Percent Valid Cumulative Percent Percent Valid Strongly Disagree 2 3.8 3.8 3.8 Disagree 7 13.2 13.2 17.0 Undecided 7 37.7 37.7 54.7 Agree 20 32.1 32.1 86.8 Strongly Agree 17 13.2 32.2 100.0 Total 53 100.0 100.0 Source: Field Survey, 2018
The total number of respondents that agreed and strongly agreed is 37.
Hypotheses Testing and Discussion of value is 0.05 and thus accept the Results alternative hypothesis. In the testing of the hypotheses and Hypothesis 1 discussion of results, two different Ho: Entrepreneurship education and hypotheses with each of them having orientation has no significant both null and alternative hypotheses effect on performance driving in were used to accomplish this research small and medium-scale work. enterprises (SMEs) in Nigeria. The decision criterion is put at the level Hi: Entrepreneurship education and of significance below 0.05 which orientation has significant effect implies that the level of confidence is on performance driving in small above 95%. Under the circumstance, and medium-scale enterprises we reject the null hypothesis once the P (SMEs) in Nigeria
Table 10: Coefficientsa Correlations Entrepreneurship Performance Education Driving Entrepreneurship Pearson Education Correlation 1 .450** Sig. (2 tailed) .001 N 53 53 Performance Pearson Driving Correlation .450** 1 Sig. (2 tailed) .001 N 53 53
** Correlation is significant at the 0.01 level (2 tailed)
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Interpretation education and orientation has significant The relationship between effect on performance driving in small entrepreneurship education and and medium-scale enterprises in performance driving in SMEs was Nigeria. tested using pearson product moment Discussion of Findings correlation (PPMC) coefficient. From the above table, it can be The rule of thumb for correlation concluded that the significant decision rule stated by Hinkle, Wiersma relationship between entrepreneurship & Jur (2003) indicates that there are five education and performance driving is ways of interpreting its results: average. Due to the average level of
1. Very high positive (negative) relationship, entrepreneurs have to re- correlation = .90 to 1.00 (-.90 to - double their effort on the acquisition of 1.00) entrepreneurship education and skills to 2. High positive (negative) correlation enhance the performance of small and = -70 to .90 (-.70 to -.90) medium-scale enterprises.
3. Moderate positive (negative) Hypothesis 2: correlation =.50 to .70 (-.50 to -.70) Ho: Entrepreneurship education and 4. Low positive (negative) correlation orientation will not adversely = .30 to .50 (-.30 to -.50) affect the profitability of small and 5. Little if any correlation medium scale enterprises (SMEs) = .00 to .30 (-.00 to -.30) if the cost of education and skill
Based on the rule of thumb stated acquisition is above the annual above, the statistical result showed a sales figure of the business. average positive significant relationship Hi: Entrepreneurship education and between the variables because the size orientation will adversely affect the of correlation falls within (.30 to .50); profitability of small and medium r=.450, and since the P-value is <0.05, scale enterprises (SMEs) if the cost we reject the null hypothesis (Ho) and of education and skill acquisition is accept the alternate hypothesis (Hi). above the annual sales figure of the Thus the result is that entrepreneurship business.
Table 11: Coefficientsa Correlations Entrepreneurship Prosperity Education Of SMEs Entrepreneurship Pearson Education Correlation 1 .330 Sig. (2 tailed) .011 N 53 53 Prosperity Pearson of SMEs Correlation .330 1 Sig. (2 tailed) .011 N 53 53
37 Interpretation profitability when the cost of education The relationship between and skills acquisition is higher than the entrepreneurship education and annual sales volume of the business. prosperity of SMEs was tested using Conclusion pearson product moment correlation This article examined entrepreneurship (PPMC) coefficient. education and orientation as The rule of thumb for correlation performance driver in small and decision rule stated by Hinkle, Wiersma medium-scale enterprises in Nigeria & Jur (2003) indicates that there are five using Astral Water Limited, Lagos as ways of interpreting its results: the focus of the study. Hypothesis one
1. Very high positive (negative) tested revealed that there is significant correlation = .90 to 1.00 (-.90 relationship between education and to -1.00) skills acquisition of the entrepreneur 2. High positive (negative) correlation and the performance of his business. = -70 to .90 (-.70 Hypothesis two showed that education to -.90) and skills acquisition could be inimical 3. Moderate positive (negative) to profitability in the small and medium correlation = .50 to .70 (-.50 scale enterprises (SMEs) if the cost of to -.70) acquiring education and skills is above 4. Low positive (negative) correlation the annual sales volume of the business. = .30 to .50 (-.30 On the whole, entrepreneurship to -.50) education and orientation leading to 5. Little if any correlation acquisition of knowledge and practical = .00 to .30 (-.00 skills are the keys to superior to -.30) performance of small businesses, economic growth of the nation and Based on the rule of thumb stated improvement in the standard of living of above, the statistical result shows that the people. Most large businesses today there is relationship between the grew out of the effort of an entrepreneur variables because the size of correlation who conceived the business idea and falls within (.30 to .50); r=.330, and then involved others to make the since the P-value is <0.05, we reject the business large and successful. Therefore null hypothesis (Ho) and accept the the importance of the small and alternative hypothesis (Hi). This medium-scale enterprises (SMEs) to the statistically means that we accept the growth of every economy should be alternate hypothesis which states that adequately recognized. entrepreneurship education and orientation will adversely affect the Recommendation profitability of small and medium scale In the interest of overall survival of the enterprises (SMEs) if the cost of small and medium scale enterprises education and skills acquisition is (SMEs) in Nigeria, the following higher than the annual sales volume of recommendations are put forward: (i) the business. the Small and Medium-scale Enterprises Development Agency of Nigeria Discussion of Findings (SMEDAN) should be given the From the above table, it can be necessary human and financial tools it concluded that there is significant needs to perform her supporting role to relationship between entrepreneurship small and medium-scale enterprises in education and orientation and
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Nigeria. (ii) The Government should put Nigerian economy. (iv) The Federal policy measures in place to make Government should collaborate with the possible favorably low commercial bank private sector to put in place the lending to small businesses in order to necessary infrastructural support, such accelerate the growth of small and as, regular power supply, good roads, medium-scale businesses in the country. water, and enhanced security across the (iii) It is time for the Government to set States and Local Governments in order up a separate Small and Medium-scale to encourage the setting up of small Enterprises Development Bank businesses in the interest of job (SMEDB) to solely finance SMEs creation and economic growth. ventures in all the sectors of the
References (unpublished master‟s thesis) Adidu, F.A. & Olanye, P.A. (2006). Babcock University Ilishan Basic small business Remo, Ogun State entrepreneurship. Agbor: Royal n Ayegba, O. & Omale, S.A. (2016). A Palace Publications, 2006. study on factors affecting Akarue, B.O, & Adogbeji, V. (2013). entrepreneurship development in Entrepreneurship Education As A Nigeria. European Journal of Strategy For Enchancing Human Business and Management, Vol. Capital Development In Nigeria. 8, No.12, 2016, pp. 43-52. A Paper Presented At The 6th Bi- Ayeduso, A.O. (1997). Perception of Ennial National Conference Of Enterpreneurship by Vocational The School Of Vocational Education Students of Kontagora. Education Held At College Of J. Edu. 3, 1. Education Warri , Delta State Boohene, R., Marfo-Yiadom, E. & 12th –15th November . Yeboah, M.A. (2012). An Akhuemonkhan, I.A. & Raimi, L. empirical Analysis of the Effect Sofoluwe, A. P. (2013). of Entrepreneurial Orientation on Entrepreneurship Education and Firm Performance of Auto Employment Stimulation in Artisans in the Cape Coast Nigeria. J. Stud. Soc. Sci.Volume Metropolis. The International 3, Number 1, pp.55-79 Institute for Science, Technology Akpan, E. I. & Effiong, S. A. (2012). and Education (IISTE) Vol 2, Entrepreneurship Education No.9, 2012pg1-11 Policy: An Intervention Strategy Durowoju, S.T. (2014). Roles of For Economic Development entrepreneurship in small and InNigeria Bus. Entrepreneurship medium enterprises development J. Vol.1, no.1, 2012, 101-110 in Nigeria. Review of Public Aliu, S. B. & Ibe, G. A. (2013). Recent Administration and Management, Trends in Entrepreneurship Vol.3, No.5, 2014, pp. 11-22. Education in Nigeria: Prospects Ikechukwu, D.C. (2014). and Challenges. www.isbe.org.uk Entrepreneurship Education and Araba S.O. (2012). Entrepreneurial development in Nigeria: Education as a tool for reducing Issues, problems and prospects. Unemployment in Nigeria International Journal of
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Technical Research and Management Review, Vol.1, No. Application, Issue 10, 2014, pp. 7, 2012, pp. 16-29. 19-23. Onyesom, O.K. & Uwaifo, C.U. (2013). Ilegbinosa, I.A. & Jumbo, A. (2015). Reforming entrepreneurship Small and medium scale education curriculum of Nigerian enterprises and economic growth tertiary institutions for graduate in Nigeria: 1975-2012. empowerment. International International Journal of Business Journal of Education and and Management, Vol. 10, No. 3, Research, Vol. 1, No.12, 2013, 2015, pp. 203-216. pp. 141-148. Doi.10.5539/ijbm.v.10n3p203. Oriazowanlan, A.O. (2013). Status of Oborah, A. (2013). Entrepreneurship: entrepreneurship education in Panacea for growth of accounting south-south Nigerian tertiary firms. The Nigerian Accountant, institutions (Unpublished Vol. 27, No.1, 2003, pp. 7-9. Doctoral Dissertation), 2013, Oghojafor, P. S., Okonji, O. O. & Nnamdi Azikiwe University, Okolie, J. U. (2011). Fifty years Awka. of entrepreneurship development Thaddeus, E. (2012). Perspectives: in Nigeria: Challenges and Entrepreneurship Education and prospects. Paper presented at the Orientation and growth of 10th International enterprises in Nigeria. Entrepreneurship Forum, Entrepreneurial Practice Review, Tamkeen, Bahrain from 9th – Vol. 2, Issue 2, 2012, pp. 31-35. 11th January 2011. Shane, S. & Venkataraman, S. (2000). Oni, E.O. & Daniya, A. A. (2012). The promise of entrepreneurship Development of small and as a field of research. Academy of medium scale enterprises. The Management Review, Vol. 25, role of government and other No.1, 2000, pp. 217-226. 181 H. financialinstitutions. Arabian N. Nzewi et al.: Entrepreneurship Journal of Business and Evolution and the Growth of Small Scale Businesses in Nigeria
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Effect of Chinese Product Price, Quality, Innovativeness and Brand Awareness on Customers’ Loyalty: An Empirical Analysis of Local Industries in Northern Nigeria
Mukhtar Halliru1, Ibrahim Kabir2 & Mukhtar Salisu Abubakar3
1Department of Business Administration and Entrepreneurship Bayero University Kano, Nigeria [email protected]
2,3Department of Business Administration Yusuf Maitama Sule University Kano, Nigeria [email protected] [email protected]
Abstract: The global economy is witnessing the massive influx of Chinese products across the global market. Nigeria in particular, is one of the countries that have a strong trade relationship with Chinese industries. Chinese products dominate most of the Nigerian market with very affordable price and compromised quality. Their pricing strategy, product design and ability to create brand awareness give their products an edge over the competitors. The study is the survey research that used regression analysis and examined the effect of Chinese product price, quality, innovativeness and brand awareness on customers‟ loyalty. A sample of 1000 respondents was selected from three states of Northern Nigeria. The study discovered a significant negative effect of Chinese product price, innovativeness and Chinese brand awareness on customer loyalty; however, the effect of Chinese product quality on customers‟ loyalty is positive and statistically insignificant. Therefore, the study concluded that Chinese product price, innovativeness and brand awareness negatively affect customers‟ loyalty on the local products. The study recommended that the local entrepreneur needs to undergo training in areas of cost cutting, efficient use of resources while being encouraged to form clusters in order to benefit from economies of scale thereby driving down cost and by extension price of products. Local entrepreneurs must embrace new technology; pursue more creativity by perusing through imported brochures for inspiration and
41 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
adapting designs to suit our own peculiarities. They should also create awareness using social media, publicity, advertisement, exhibition among other methods of creating awareness. Key Words: Chinese Product price, quality, innovativeness, brand awareness, customers‟ loyalty, local industries.
Introduction with them and established a very good Since the establishment of diplomatic rapport with the local businessmen. The links between Nigeria and China in unjust trading activities embarked upon 1971, it is apparent that the nexus by the Chinese has brought textile always favoured China. This is obvious traders to their knees, through the considering the volume of goods importation of textile materials, storing coming into Nigeria in relation to the the goods at their various warehouses in goods going to China. For instance, in the city then dispatch it to the domestic 2005, China imported goods worth USD market for sale at the lowest rate.
2.3 billion, in contrast Nigeria‟s exports The importations of goods by Chinese to Chinese economy valued at especially in the areas of the dyeing of USD503.9 million within the same year. fabrics, Ghalilar textile, native Hausa Similarly, between the periods of 1996 cap (Zanna Bukar) popularly known to to 2001, trading activities between the be fabricated in Maiduguri, Borno state two countries grew from 178 million made local products lose their high USD to 1.44 billion USD, this trend proceeds due to the low price from the rose to 17.7 billion USD in 2010 competing products made in China and (Egbula & Zheng, 2011). It is apparent this posed a serious threat to the local that the markets in the northwest states industries. The Chinese Ghanilah is of witnessed a huge inflow of Chinese inferior quality but when they realized business operators who market their that the poor quality Ghanilah for goods at cheap rates to customers to the example has been rejected by disadvantage of indigenous industries customers, they started to buy white and traders. textile (Shadda) and taking it for dyeing Chinese business strategies have put instead. This led to decline in sales, many indigenous industries on the brink local dyers complained bitterly and of bankruptcy, knowing that Nigerians protested on the imported Chinese made are driven by affordability rather than commodities undercutting local goods. quality, they produce goods at the These unfair trading activities and lowest rates making it impossible for marketing strategy by Chinese traders local businessmen to compete. Some jeopardized the potential of domestic customers are keen on product textile marketers in Kantin kwari, local innovativeness while others are more dye fits and other local industries concerned with the product quality. competing with Chinese products. Chinese traders hijacked ancestral Similarly, Chinese use local marketers business in the northwest region of to lure customers by settling them with Nigeria. They first came as spies, huge commission (between N500 – arriving with innovations and creativity N1000) at the end of the transaction leading to their comprehension of the with a customer. This practice secret of business in the state. They complemented with Chinese product infiltrated the Hausa natives, interacted quality, innovativeness, price and brand
42 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) awareness may be some of the reasons using a product or service (Al-Msallam, why customers switch from locally 2015; Faith & Edwin, 2014; Kotler & made to Chinese products, trade their Armstrong, 2012). Consumers hinge on loyalty and thus may affect the survival product price to determine whether they of local industries. Thus, this research can afford it, they also consider it as a seeks to identify the vital aspects of surrogate measure of product quality Nigeria-China bilateral interactions, the (Shugan, 1984). effect of Chinese product price, quality, Product Quality product innovativeness and brand Product is anything that can be offered awareness on local brand loyalty and the to satisfying needs and wants. It can be changing viewpoint on the feasibility of seen as anything that can be offered to the bilateral ties. The study therefore the consumer for attention, acquisition asked the following questions: and use capable of solving problem or Objective of the Study provides certain benefits (Agyekum, To examine the effect of Chinese Haifeng & Agyeiwaa, 2015; Razak, product price, quality, innovativeness 2016). Customers depend on product and brand awareness on local brand cues such as packaging, price and brand loyalty. image in order to deduce the quality of Hypothesis the product (Chinomona, Okoumba & H01: Chinese product price, quality, Pooe, 2013). Improving perceived innovativeness and brand awareness product quality influence consumer have no significant effect on local brand satisfaction and increase customer loyalty. loyalty thus enhance profitability
Literature Review (Bagran & Khan 2012; Suchánek, Price Richter & Králová 2014). In a study Price is considered as one of the key conducted by Chinomona et al, (2013) components in marketing mix that plays pointed out that product quality has a a very significant role in determining strong effect. Perceived product value brand loyalty. It has a significant effect has significantly influences customer on sales volume, profit, market share trust and purchase intention. Agyekum and consumer perceptions (Stone & et al (2015) argued that consumers‟ Desmond, 2007). Marketers appeal to perception differs on the basis of their consumers usually through higher and ages, income levels, and educational lower quality prices (Shirai, 2014). The background and this serve as a gauge in importance of price made it very determining the quality of a product sensitive factor that influence consumer when making a purchase. Halim, purchase decision, thus pricing decision Swasto, Hamid and Firdaus (2014) has to be harmonized with the rest of the findings provide the presence of marketing mix i.e. product, promotion significant impact between product quality and customer loyalty. and placement (Virvilaite, Saladiene & Skindaras, 2009). Price can be defined Brand Awareness as the amount of money charged by a High product or service awareness company in exchange of its goods, represents a good product reputation services or an idea. It also refers to sum and market acceptance (Chigora & of all values that consumer sacrifice to Zvavahera, 2015; Dhurup, Mafini & obtain the benefits of possessing or Dumasi, 2014; Severi & Ling, 2013).
43 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Consumers opt for a brand based on Yaseen, Tahira and Anwar (2011) their previous knowledge and indicate no significant effect of brand experiences. To them, the most familiar awareness and loyalty whereas brand is more reliable than less familiar significant impact of perceived quality brands, hence affecting product on profitability was present. selection (Khan, Rizwan, Islam, Customer Loyalty Aabdeen & Rehman, 2016). Brand Customers serve as core assets of every awareness serve as an assurance of firm, providing superior customer value quality and risk mitigation technique influence customer loyalty. Customer (Rubio, Oubiña & Villaseñor, 2014). loyalty arises as a result of customer Severi and Ling (2013) believed that satisfaction on quality, value, powerful brand association affective expectations, and company image. customers buying decision. It is Customer loyalty is accomplished by suggested that brand awareness is delivering superior customer value considered as the basis for creating (Hortamani, Ansari & Akbari, 2013; brand equity. This signifies that brand Marina, Kartini, Sari & Padmasasmita, awareness form the foundation of 2016). Customer loyalty is imperative building brand equity of a product. towards attaining and maintaining Packaging, price and brand awareness is competitive advantage. Customer said to have significant positive nexus loyalty can also be accomplished with brand loyalty, which inferred their through seasonal rebates, coupons, free significant predictive influence on brand offers, extended warranties, incentive loyalty (Dhurup et al, 2014). programs etc. The rationale behind The study of Akhtar, Ahmed, Jafar, customer loyalty programs is based on Rizwan and Nawaz (2016) reveal that the believe that a pleased customer will packaging and brand awareness have re-purchase, recommend, refuse strong positive significant relationship competitors article and convince others with brand loyalty. The investigation of (friends, family members, colleagues, Khan, Jadoon and Tareen (2016) submit neighbors etc.) to use firm products or that consumers commitment toward services (Marina et al, 2016; Onditi, buying, both current and future is 2013). Empirical evidences found that affected by brand awareness. Chi, Yeh, customer loyalty is significantly Chien and Yang (2009) highlighted a affected by customer trust in the significant connection between brand Pakistani cellular company (Sarwar, awareness, perceived quality, brand Abassi & Pervaiz, 2012). loyalty and purchase. Zhao, Tong, Li, Signaling Theory Ma and Wang (2016) indicate that This theory provides insight into the significant positive connection exist role of country-of-origin reputation as between brand awareness and brand an instrument that firms can use to loyalty. However, Rubio, Oubiña and convey information on their product Villaseñor (2014) discovered that brand quality and behaviour (Sirdeshmukh & awareness and brand equity have Singh, 2000). It explains the underlying negative effect on the consumer‟s difficulties of purchasing foreign identification of store brand due to products and the relevance of country- higher perceived risk for the brands . In of-origin to efficient decision making. the same vain, the results of the work of Signaling theory provides a framework
44 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) to study the problem of consumer basis, with Kano having the highest uncertainty resulting from a firm‟s population and received 447 information advantage over consumers. questionnaires, followed by Katsina According to this theory, firms whose with 316 questionnaires and Jigawa products are of superior to average with 237 questionnaires. Due to the quality send credible signals that help absence of sampling frame, the study the consumers to distinguish firms with used non-probability sampling high-quality products (Boulding & techniques (quarter sampling) to select Kirmani, 1993). Signals disseminate the respondents from the selected three information through both tacit and states. explicit messages that disclose Method of Data Collection information on a firm's quality, future The study used structured questionnaire behaviour, intentions, values and in collecting the data from the capabilities (Bergen et al., 1992). respondents. Using five liket scales, the Signaling would be an efficient method questionnaire covers all the variables in of solving classification problems on the study i.e. demographic variables, international markets, were it profitable dependent and independent variables. to high-quality firms but not to low- The questionnaires were administered quality firms (Boulding & Kirmani, directly to the target population using 1993). It is undoubtedly a useful theory trained research assistants. to understand a firm‟s reputation as a signal that is used to convey information Model of the Estimate (Regression) The study adopted the following on foreign firms to consumers (Bilkey regression equation: & Nes, 1982; Ahmed et al., 2004). Yt = + β1x1 + β2x2+ β3x3+ β4x4+ ȇn Methodology Where Yt is the dependent variables, i.e. Research Design customers‟ loyalty, is the intercept This study is a survey research designed to examine the effect of Chinese product which is constant and measures the price, quality, innovativeness and brand change in brand loyalty when awareness on local brand loyalty. coefficients of independent variables are zero; β1 to β4 are the coefficient of Population, Sample and Sampling independent variables,x1 to x4 are the Techniques independent variables (product price, The population of the study consists of quality, innovativeness and brand consumers across the seven states of awareness) while ȇn is the error term Northwest region of Nigeria. Three which is random or stochastic. states i.e. Kano, Katsina and Jigawa were selected from the seven states. The Properties of the Model choice of these states is determined by a. The regression model is Yt = + their cluster, highest concentration of β1x1 + β2x2+ β3x3+ β4x4+ ȇn local industries and the consumers that b. The expected value of y is E(y) = patronize Chinese products, thus these + β1x1 + β2x2+ β3x3+ β4x4 states serve as a major market of c. The variance of and is the Chinese products. The sample of one same for all values of x. thousand (1000) was considered in the d. The values of en are independent. study. The questionnaires were e. The error term e is normally distributed across these states on prorate distributed.
45 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Factor Analysis this region while nine hundred and To exploit the structure of the seventy eight (978) representing 97.8% questionnaire and examine its were returned completed. components, factor analysis was Factor Analysis conducted and the result was presented The Kaiser-Meyer-Olkin (KMO) and in this paper. Kaiser-Meyer-Olkin Bartlett‟s test of Sphericity which (KMO) and Bartlett‟s test of Sphericity measure the sampling adequacy and measure the sampling adequacy and indicate whether the partial correlations indicate whether the partial correlations among variables are adequate or not among variables are adequate or not. shows the coefficient value of 0.919 and Correlation between the items is the Bartlett‟s test of sphericity was examined to clarify the level and significant at(2 (20646.614) = 435, p < magnitude of relationship between the .05). This highlights a strong sample variables while the relationship between adequacy in the study. the group of items is assessed using factor loading where the variance Communalities coefficients in all the explained by the factor is highlighted in variables were above cut-off point of the eigenvalues, the variance shared 0.7. This explains that the items share between the items was presented in the common variance with one another. The communalities coefficient. diagonal values from the anti-image matrix that represent the covariance and Scale Analysis correlation between the items shows The validity and reliability of the that all the coefficients of the items are instruments was assessed through scale greater than 0.5, hence supporting the analysis. Cronbach‟s Alpha coefficient inclusion of each item in the factor as one of the popular test of inter-item analysis. The Correlation coefficients consistency reliability test was used to from the same table indicated a examine the internal consistency reasonable inter-correlation among most between the items in the questions. of the items. Using Bartlett‟s test of Result and Discussion spherity, all the items correlated with The total of one thousand (1000) one another, suggesting reasonable questionnaires were distributed to the factorability of the variables. customers/ consumers of the products i.e. Chinese and Local Products within
Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigenvalues Loadings Loadings % of % of Compo Varia Cumulative % of Cumul Varian Cumulat nent Total nce % Total Variance ative % Total ce ive % 33.82 10.14 1 10.146 33.820 33.820 33.820 5.270 17.568 17.568 0 6 15.30 2 4.591 49.124 4.591 15.305 49.124 4.781 15.937 33.505 5 11.56 3 3.471 60.693 3.471 11.569 60.693 4.635 15.450 48.955 9 4 2.681 8.937 69.630 2.681 8.937 69.630 4.359 14.531 63.486 5 1.810 6.035 75.665 1.810 6.035 75.665 3.654 12.179 75.665 Source: 2015 Survey data, for IBR
46 Five factors were extracted from the while the other four factors explained items. Factor 1 labeled customers‟ 15.305%, 11.569%, 8.937% and 6.035% loyalty, factor 2 product price; factor 3 of the variance respectively. This shows product quality; factor 4 product that much of the loading is skewed innovativeness while factor 5 brand toward the first factor. However, the awareness. The five factors extracted in variance after varimax rotation changed the analysis explained about 75.665 the proportion of the loading and percent variance between the groups of justified the spread among the factors variables as we can see from the factor with 17.568, 15.937, 15.450, 14.531 and loading in the table above. The initial 12.179 for the first, second, third, fourth Eigenvalues showed that the first factor and fifth factors respectively. explained 33.820% of the variance,
Reliability and Test-retest Results
Reliability test Instruments No. of items Cronbach’s Alpha Product Price 5 0.952 Product Quality 6 0.965 Product Innovativeness 6 0.936 Brand Awareness 5 0.626 Customers‟ Loyalty 6 0.950 Source: 2015 Survey data, for IBR
The result from the above shows strong coefficient of 0.950, product internal consistencies between the items innovativeness was measured by six measuring the variables in the items and scored the coefficient of questionnaire, within the Cronbach‟s 0.936, and lastly, brand awareness alpha values greater than 0.6 across all which was measured by five items and the five variables. Six (6) items were obtained the least but not weak used to measure product quality and coefficient of 0.626. This result justified they were internally consistent within the result from factor analysis test and the coefficient of 0.965, this followed explained that the items were tailored by product price which was measured toward measuring the required by five items and consistent within the variables. Hence, concluded that there is coefficient value of 0.952, Customers‟ strong internal consistency between the loyalty was assessed using six items and items in the questionnaire. consistent within the Cronbach‟s Alpha
47 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Regression Analysis Result
Adjusted Std. Error of the Model R R Square R Square Estimate 1 .718a 0.516 0.513 4.51319 ANOVAa Sum of Model df Mean Square F Sig. Squares Regression 15401.762 4 3850.441 189.036 .000b 1 Residual 14461.894 710 20.369 Total 29863.656 714 Coefficientsa Unstandardized Standardized Collinearity T Sig. Coefficients Coefficients Statistics Model Tol Std. B Beta eran VIF Error ce (Constant) 38.223 0.842 45.382 0.000 0.65 Product Price -0.076 0.036 -0.067 -2.085 0.037 1.534 2 Product 0.053 0.03 0.059 1.78 0.076 0.63 1.586 1 Quality Product 0.83 -0.487 0.031 -0.445 -15.563 0.000 1.2 Innovat. 3 Brand 0.43 -0.683 0.067 -0.402 -10.138 0.000 2.303 Awareness 4 a. Dependent Variable: Transformed Brand Loyalty b. Predictors: (Constant), Brand Awareness, Product Innovativeness, Product Quality, Product price
The power of the model explained the price, product innovativeness, and effect of product price, quality, Chinese brand awareness have negative innovativeness and brand awareness on effect on local brand loyalty. With the customers‟ loyalty. The model summary coefficient values from product price shows the adjusted R square of 51.3% which is equal to -0.067, t-2.085 and which explain the variance in the sig. p-value of 0.037, while product dependent variable caused by the quality coefficient of -0.445, t-15.563 independent variables. This variance is and sig. p-value of 0.000, and brand statistically significant at p value of awareness coefficient of -0.402, t- 0.000. This value is reasonably good 10.138 and sig. p-value of 0.000, the looking at the area of the study i.e. study discovered a significant negative behavioral science. With the coefficient effect of Chinese product price, of VIF below 10 points across all the innovativeness and brand awareness on variables, the result proves no sign of multicollinearity problem. local brand loyalty. This implies that lower price from Chinese product, their The effect of the individual variables on innovative benefit and Chinese brand dependent variable is reported in the awareness significantly motivate coefficient section from the same table. consumers to prefer Chinese products The result shows that Chinese product than local products which in return
48 negatively affect local brand loyalty. product price, innovativeness and brand However, product quality has awareness negatively affect customers‟ insignificant positive coefficient of loyalty on the local products. The study recommended that the local implying that Chinese product quality entrepreneur needs to undergo training has no significant on customers‟ loyalty. in areas of cost cutting, efficient use of This may be due to the customers‟ resources while being encouraged to perception of poor product quality form clusters in order to benefit from attributed to Chinese products. Based on economies of scale thereby driving this result therefore, the study accepted down cost and by extension price of that Chinese product price, products. Local entrepreneurs must innovativeness and brand awareness embrace new technology; pursue more significantly influence customers to creativity by perusing through imported avoid local brands. This implies that the brochures for inspiration and adapting ability of the Chinese business operators designs to suit our own peculiarities. to create brand awareness through Furthermore, they should respond by several strategies such as producing leveraging on current business trend to variety of products, promotion, display, create awareness using several advertisement, affordable product price, promotion strategies, and the innovativeness etc. significantly government should also provide an motivate consumers to prefer Chinese enabling environment, initiate and products than local products which in enforce appropriate economic policies return negatively affect local brand that will improve the status of local loyalty. industries to compete with their Chinese counterparts. Conclusion Based on the above finding therefore, the study concluded that Chinese
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52 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition)
Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
The Relevance of Corporate Affairs Commission to Small and Medium Enterprises (SMES) in Nigeria (A Study of Konum Farms Limited, Amai, Delta State)
Dr. Matthew Ezem Ibekwe
Department of Business Administration College of Management and Social Sciences Novena University Ogume, Delta State, Nigeria
Abstract: This study examined the relevance of Corporate Affairs Commission to Small and Medium Enterprises (SMEs) in Nigeria with a case study of KONUM FARMS Limited, Amai, Delta State. The research problem is borne out of the general outcry that government establishments do not perform efficiently and effectively because they are not profit oriented organizations. The objectives of the study were, among others, to appraise the functions and roles of Corporate Affairs Commission as a regulatory body under the Nigeria Law. The research questions and hypotheses were structured in line with the objectives of the study. The research methodology explained the techniques adopted in carrying out the study. The descriptive research design was used. The population of the study comprised the Management and Staff of Konum Farms Limited, Amai. The sample size was determined using the simple percentage statistical tool. A questionnaire instrument was used for data collection. The data were presented in tables and analyzed in percentages. The chi-square was used to test the hypotheses. The findings were, among others: (i) that frequent changes and sometimes conflicting government monetary policies had in many ways tended to hurt SMEs in Nigeria. (ii) that government neglected SMEs in the area of incentives and infrastructural development to facilitate business entity. (iii) that government does not give SMEs in Nigeria financial support in order to thrive. It was recommended, among others, (i) that government should stop improper implementation of its policies towards SMEs. (ii) that government should enhance its incentive measures and infrastructural development to SMEs. (iii) that government should adequately support the SMEs through lending institutions to enhance their capacity base.
Keywords: Small and Medium Enterprises, Governance, Entrepreneurship,
53 Introduction of Corporate Affairs Commission in The Small and Medium Enterprises Nigeria.
(SMEs) compete with their larger Objectives Of The Study counterparts in the same environment in The objectives of the study include: Nigeria although without the 1. To appraise the functions and role of accompanying benefits such as adequate Corporate Affairs Commission as a capital and extended human resources regulatory body under the Nigeria enjoyed by the larger organizations. Company Law since its The extensive competition the SMEs establishment. encounter is fuelled by globalization, 2. To examine the extent to which legislation and the relaxing of trade Corporate Affairs Commission has barriers, as well as increase in market helped in the growth and expansion due to emerging technologies development of SMEs in Nigeria. and innovation. 3. To examine the extent to which Company law in Nigeria is foreign to KONUM Farms Limited has Nigeria and it was incorporated into the contributed to the growth and Nigeria system through the received development of the Nigeria English Laws. It has undergone economy. numerous evolution ranging from the Review of Literature companies ordinance, 1992. The The performance and effectiveness of Companies and Allied Matter Act SMEs as an instrument of economic (CAMA) 1990 now 2004 with growth and development in Nigeria has remarkable innovation included. The long been under scrutiny (Ihua,2004). The Corporate Affairs Commission The SMEs have fallen short of (CAC) was establish by Section 1 of the expectation. This has generated serious CAMA as a corporate body with concern and scientism on whether perpetual succession and a common SMEs can bring about economic growth seal, capable of suing and being sued in and national development in Nigeria. its corporate name and of acquiring, Iregha (2011) opined that in the case of holding or disposing of all types of Nigeria, SMEs had performed at a very property for the purpose of its functions. abysmal level. This performance has The major function of CAC is to further exacerbated poverty, hunger, administer the Act. unemployment and low standard of Statement of the Problem living of people in a country whose It has been observed that majority of the economy is ailing. The current problems Small and Medium Enterprises (SMEs) of hunger, poverty and unemployment in Nigeria are still at low level of have undermined the capacity of the development especially in terms of economy and the SMEs are seen as number of jobs, wealth and value mechanism for intervention to creation in this circumstances, 65% of addressing these long term problems. the active population, who are majorly Unfortunately, the SMEs have not been entrepreneurs appear to be unserved by able to propel economic growth and the formal financial institutions. The development which are “sine qua non” study therefore looked at the major for mitigating the effects of poverty, challenges facing the growth and hunger, unemployment and low development of SMEs visa vis the role standard of living. The challenge of addressing the problem of hunger,
54 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) poverty and unemployment is even registration before doing business in more worrisome when considering the Nigeria, whereas, the same law allows actualization of the millennium such companies to have capacity to sue development goals and one of the sure or be sued in Nigeria in the absence of ways is to embrace the capacity of its registration. The current position of our SMEs. The core issues identified by the laws on the regulation of foreign millennium development goals such as company‟s capacity to sue would hunger, poverty, literacy, materials and encourage most foreign companies to do mortality rate would not be achieved business in their respective countries to unless the problems of the SMEs are consummate such business without clearly tackled. registration and if there are challenges
According to Omotola (2008), the subsequently they will use an attorney challenges and problems of SMEs are or agent to do business in Nigeria tied to some economic variables and the without having to maintain physical presence in Nigeria. challenges that generally characterized the nation‟s economy. Some of the Another essential issue of regulations of challenges and problems include high companies is in the area of corporate level of unemployment, high poverty governance in the regulation of takeover incidence and low industrialization bid of companies. The issue of capacity, lack of finance, inconsistence corporate governance is the sole means government policies and inadequate through which the Commission can act infrastructure and insecurity of the as checks and balances on how a business climate, among others. company may be taken over by another.
Considering the topic of the research Some of the views that the provision of “The Relevance of Corporate Affair Companies and Allied Matter Acts Commission to Small and Medium (CAMA) on takeover bid and its Enterprises (SMEs) in Nigeria “, the regulation therewith frustrate the primary law for company regulation in functioning of the capital market. The Nigeria is Companies and Allied Matter regulation of companies will not be Act Cap C20 laws of the federation of possible without the Corporate Affairs Nigeria 2004 which is the basic law for Commission. However, the provision of this research. This Act allows foreign the Chairman and the Secretary of the Companies to participate in trade or Commission are not clear and gives business in Nigeria after incorporation. room for divergent views. According to Section 5 of CAMA empowers the C.S. Ola, section 5 (2) of CAMA does Commission to invoke the penalty for not make the position of the Chairman non-registration before business, which clear and evident especially provisions makes an officer of a company or its dealing with his powers beyond agents who knowingly and willingly supervisory roles of chairing meetings. authorizes or permits the default to Further, no express provision is made of register in Nigeria shall be liable on the office of the secretary, as is the case conviction to pay a fine of ₦25,000 with quorum, no provision on the jointly with the company. quorum of the members of the Commission. This, to a large extent Inspite of the position of our laws on the encourages the recourse to the issue of Locus standi, it is however our interpretation Act. Ola belongs to the view that it is misplaced to insist on
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School of thought that for the issues of quality of both staff and services quorum of the members of the delivery.
Commission, the interpretation Act, be In a related study, Kirfi, Abduallahi & resorted to instead of the Companies Idris (2013) established that “the reform and Allied Matter Act. in CAC has resulted in the Inspite of all the positions held by computerization of operations, human writers and scholars, it is hoped that this resources management adjustment and research work will attempt to put the adoption of a number of capacity various positions in the proper building techniques in addition to perspective and with a view to taking a strengthening the process of stand and thereby contributing to enforcement and compliance. The study discourse how the Corporate Affairs concludes that, the enforcement of the Commission (CAC) has fared in the CAC compliance arrangement was regulation of companies within the significance to ensuring the practice of confines of the Nigeria Company law. corporate governance and service
Conceptual Framework improvement. This study therefore The idea of Corporate governance is seeks to extend the frontier of associated with classical economic knowledge by examining the impact of theory which laid emphasis on the way the reform on corporate governance and which economic growth and quality services delivery by the Nigeria development in an economy can be CAC using service quality model. stimulated by individuals and corporate The Services Quality (Servqual) investments. According to Demb and Model Nembauer (1992), Corporate The SERVQUAL model deals with an governance “is the process by which overall judgement towards the service corporations are made responsive to the delivery (Parasuraman, Zeithami & rights and wishes of stakeholder” Monk Barry, 1988). This model emphasized & Minow (1996), opined that “it is the on organization‟s ability to provide relationship among various participants services efficiently and effectively in determining the direction and irrespective of the type of organization, performance of corporations”. Franzini the model applies to a broad sphere of (2009) emphasizes the need of ensuring service. In a related study, Ebenezer & effective corporate governance Omoneye (2014), established that framework applicable in our “SERVQUAL model emphasized on contemporary world. Albert Franzini‟s evaluating the quality of a service by the findings is applied to Central and customers on the following five (5) Eastern Europe because of their dimensions: reliability, responsiveness, economic stability and sound regulatory assurance, empathy and tangibles. framework, his findings may not be Assurance: ability to instill confidence applicable to the situations in the less in customers, investors feel safe in their developed economies like Nigeria transaction, Reliability: provides where regulatory bodies lack the ability services at the time promised, to enforce compliance perhaps due to maintaining error-free records; political interference which could in Tangible: have up – to – date turn, affect their outputs in terms of equipment; Responsiveness: inform customers when services will be
56 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) performed, offer prompt services to limited by shares, unlimited customers, and Empathy: employees company, company limited by given personal attention to all; guarantee). employees having investor best interest. ii. Registration of business name.
The SERVQUAL model proposes that iii. Registration of incorporated customers (investors and general public) Trustees. can evaluate the quality services iv. Insurance of certified true copies tendered by organizations. In relation to of extracts of field documents. this work, the relationship between the v. Registration of increase in share quality of service citizens enjoy and capital, mortgages, debentures competence the regulatory bodies and charges, etc. exhibit are very significant. The model, vi. Processing the statutory filing of therefore, can be used to explain re- (a) Annual returns (b) alterations organization reforms in regulatory of the memorandum and articles bodies and on the other hand, measures of association (c) addresses etc. the quality of services they provide to vii. Change of Directors the customers. In particular, the reform viii. Change of particulars of allotment enables the CAC to run its business in ix. Change of registered office accordance with global best practices address which are the end results of the five (5) x. Registration of receivership dimensions of the SERVQUAL model. xi. Registration of appointment liquidation Functions of the Corporate Affairs xii. Statement of Affairs pursuant of Commission (CAC) section 636 of any company. The Corporate Affairs Commission is xiii. Conducting investigation into the established to take over and perform affairs of any company, business those functions of the defunct names or incorporated Trustees. company‟s registry. The functions are; xiv. Supervising the management and (a) to administer the provision of winding up of companies. Companies and Allifed Matter Act xv. Enforcing compliance with the (CAMA) including the resolution and provision of CAMA by corporate supervision of the formation of bodies. incorporation, registration, management xvi. The commission offers same day and winding up of companies under or incorporation service under which in pursuance to the CAMA subject to companies are registered within a section 541 (b) to establish and maintain day; and a company‟s registry and offices in all xvii. Accreditation of lawyers, the states of the federation suitably and chartered accountants and adequately equipped to discharge its chartered secretaries who are functions under the CAMA or any direct users of the services of the others law in respect of which it is commission. (CAC Notes on charged with responsibility. customers guidance 2010:24). The specific functions of the Corporate The commission also registers Affairs Commission as set out in section business names, and incorporate 7, of the CAMA include: trustees as well as provide a wide i. Incorporation of companies range of ancillary services. (Private of Public company
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Significance of the Study HA: There is significant co- This study has various advantages from operations between Corporate the point of view of stakeholders, Affairs Commission and SMEs in management and particularly KONUM Nigeria. farm in the implementation of their 3. Ho: There is no significant action plans. relationship between KONUM The finding will also benefit the Farms Limited and the growth following categories of people: and development of the Nigeria 1. Policy Makers: The findings will economy. guide them in making policies and HA: There is significant regulations that will create enabling relationship between KONUM environment for SMEs. Farms Limited and the growth 2. SMEs: The findings will enable them and development of the Nigeria and KONUM farms in particular to economy. identify the problems confronting the The hypotheses were tested at 95 development of small and Medium percent confidence level. Enterprises. The major focus of this paper is the 3. Investor/Entrepreneurs: This will examination of the role of Corporate enable this category of people and Affairs Commission on SMEs in the management of KONUM farms Nigeria.
in particular to know what to expect Research Methodology from the government in the Sample Size promotion of SMEs. It will assist The sample used in this study is from them to know the financial the total number of the management and implications of establishing the staff of KONUM farms out of which a SMEs. sample size of 70 was selected.
Research Hypotheses Data Collection Based on the research questions and the The main instrument used for collecting statement of the problem for this study, data were the questionnaires which were the following research hypotheses were distribution to the management and staff formulated: of KONUM farms. The total number of 1. Ho: There is no significant the management and staff of KONUM assistance between Corporate farms is 100 out of which a sample size Affairs Commission and Small of 70 was selected. The questionnaires and Medium Enterprises in were retrieved within a specific time of Nigeria not more than a week. The alternative hypothesis (H ) is: A Method Used for Data Analysis H : There is a significant A The method used in this study was assistance between Corporate simple percentage and chi-square (X2) Affairs Commission and Small test statistic. The simple percentage was and Medium Enterprises in used to analyze the research questions Nigeria. while the chi-square was used to 2. Ho: There is no significant co- analyze the hypotheses. operation between Corporate The formular for chi-square (X2) is Affairs Commission and SMEs in stated below: Nigeria.
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X2 = ∑ (fo-fe) Df = (r – 1) (c – 1)
Fe Where: Where: ∑ Df = Degree of freedom ∑ = Summation R = Number of rows C = Number of Columns fo = Observed frequencies fe = Expected frequencies Presentation and Analysis Of Data fo – fe = The difference between The characteristics of the various observed frequencies. respondents used for the study are Also the degree of freedom established shown in the table below: for the study is given by the formular shown below;
Table 1: Sex of Respondents S/N Sex No. of Respondents % (Percentage) 1 Male 53 75.7% 2 Female 17 24.3% Total 70 100 Source: Field Survey, 2018.
Table 1 above showed that 53 respondents representing 75.6% were male while 17 respondents, representing 24.3% were female.
S/N Age Bracket No. of Respondents % (Percentage) 1 20 – 30 yrs 33 47.1 2 31 – 40 yrs 7 10 3 41 – 50 yrs 29 41.5 4 50 above 1 1.4 Total 70 100 Source: Field Survey, 2018.
Table 2 above showed that 33 1.4% was within the age bracket of 50 respondents representing 47.1% were and above. within the age bracket of 20 – 30 years; Analysis of Data 7 respondents, representing 10% were From hypothesis 1: There is no within the age bracket of 31 – 40 years; significant assistance between 29 respondents, representing 41.5% Corporate Affairs Commission and were within the age bracket of 41 – 50 Small and Medium Enterprises in years while 01 respondent, representing Nigeria.
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Table 3: Assistance between Corporate Affairs Commission and SMEs in Nigeria. Response Fo Fe Fo – Fe Fo – Fe2 Fo – Fe2 Fe Yes 45 35 10 100 2.857 No 25 35 -10 100 2.857 Total 70 70 0 200 5.714 Source: Field Survey, 2018
Chi-square computation table X = 2.390 The statistic test X2 = ∑ (fo-fe) Critical value = 2.390 Comparing the test statistics with the Fe critical value is 5.714 > 2.390 The level of significance used in 5% is Therefore, the alternative hypothesis 0.05 (H1) is accepted which states that there Therefore Df = (r – 1) (c – 1) is significant assistance between (2 – 1) (4 – 1) Corporate Affairs Commission and the 1 x 3 = 3 Small and Medium Enterprises in X2 = 5.714 Nigeria. X = √5.714
From hypothesis 2: There is no significant co-operation between the Corporate Affairs Commission and the SMEs in Nigeria Response Fo Fe Fo – Fe Fo – Fe2 Fo – Fe2 Fe Yes 50 35 15 225 6.428 No 20 35 -15 225 6.428 Total 70 70 0 450 12.856 Source: Chi-square computation table
The statistics test is X2 = ∑ (fo – fe)2 Comparing the test statistics with the critical value is 12.856 > 3.585 fe Therefore the alternative hypothesis The level of significance used in 5% i.e (HA) is accepted which states that there x 0.05 is significant co-operation between Therefore Df = (r – 1) (k – 1) CAC and SMEs in Nigeria. (2 – 1) (4 – 1) From hypothesis 3: There is no 1 x 3 = 3 significant relationship between By X2 = 12.856 KONUM Farms Limited and the growth X = √12.856 and development of the Nigeria X = 3.585 economy. Critical value = 3.585
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Table 5: Relationship between the growth and development of Nigeria Economy and KONUM Farms Limited. Response Fo Fe Fo – Fe Fo – Fe2 Fo – Fe2 Fe Yes 60 35 25 625 17.857 No 10 35 -25 625 17.857 Total 70 70 0 1250 35.714 Source: Chi-square computation table
The statistics test is X2 = ∑ (fo – fe)2 sine qua non for improving the quality of life. The study revealed that SMEs fe contributed to global economic growth The level of significance used in 5% ie and development. x – 0.05 It was further revealed that frequent Therefore Df = (r – 1) (k – 1) changes and sometimes conflicting (2 – 1) (4 – 1) government monetary policies had in 1 x 3 = 3 many ways tended to hurt SMEs in 2 By X = 35.714 Nigeria. Also it was revealed that
X = √35.714 entrepreneurship assists in reducing X = 5.976 poverty and improve standard of living.
Critical value = 5.976 Recommendations Comparing the test statistics with the It was recommended, among others, that critical value is 35.714 > 5.976 government should ensure that there Therefore the alternative hypothesis will be no improper implementation of (HA) is accepted which states that there its policies towards SMEs and should is a significant relationship between not neglect SMEs in the area of KONUM Farms Limited and the growth incentives and infrastructural and development of the Nigeria development. Also SMEs should ensure economy. that they resolve their internal problems
Findings, Recommendations and which hinder their success. For instance, Conclusion that there is effective management The study sets out to examine the practices or expertise, effective relevance of Corporate Affairs accounting standards, adequate Commission to SMEs in Nigeria. manpower and avoid financial Specifically, the study seeks to examine indiscipline and corruption in order to the role of Corporate Affairs boost the performance of SMEs in Commission as it affect the SMEs in Nigeria.
Nigeria, government assistance to SMEs Conclusion in Nigeria and the contribution of SMEs The following conclusion were drawn to the economic growth and (i) that the role played by government development in Nigeria. towards the promotion and development
Findings of SMEs in Nigeria is highly effective The study revealed that accelerated in the sense that government supported economic growth and development is a SMEs through favourable investment
61 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) policies, institutional and fiscal policy, aimed at improving SMEs, the sector protective business law and financial has performed below expectation in incentives to encourage the national Nigeria. However, the challenges development and indigenizaton policy associated with SMEs and their failure which SMEs are very central to. (ii) have been widely acclaimed as lack of Several micro lending institutions were planning, inimical government established to enhance the capacity and regulations, poor marketing strategies, development of SMEs and liberalization lack of technical know-how, lack of of the banking sector to enhance the infrastructural facilities, lack of capital banking institution for effective and internal characteristics and participation in the growth and capacity problems of poor management practice, building of SMEs in Nigeria (iii) there poor accounting standards, shortage of are various confronting constraints to manpower, financial indiscipline and SMEs in Nigeria, in the sense that, it is corruption. All the above, reflect the worrisome that despite the incentives, relevance of Corporate Affairs favourable policies and regulations and Commission to SMEs in Nigeria. preferential support by government
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Monks and Minow (1996). Corporate CAMA, 2004 17 section 24, Governance, Cambridge. Black CAMA, 2004 18 Kenna & well, M.A. Associates, “Establishing an Ola C.S. Company law in Nigeria Enterprise in Nigeria: The Legal Heinemann educational books Framework”, (Nig) Plc. Ibadan (2002). www.ken&associate.com, Omotola, D. (2008). Small scale Assessed on the 15th June, 2010. enterprises economic reform and Servicom (2007). History, Service national development in Nigeria, compact, retrieved 18/12/113@ Lagos Adejo Publishing. http://www.servenigeria.com, 1 – Parasuraman, A., Zeithanl, V.A & 6. Barry, L.L (1988). SERVQUAL: Tumbull, S. (1995). Corporate A multiple item scale for Governance, Harvard Business measuring consumer perceptions review, May – June 169 – 170. of service quality Journal of Van, Slyke M, (2006). Agent or retailing, 64 (1), 12 – 40. Stewards: using theory to Osaze, B.E (2007). The Imperative of understand the government non- Corporate governance and post- profit social service contracting merger Acquisition/condolidation relationship. Journal of Public for sustainable growth”. Finance Administration Research and and banking, 1 (1): 46 – 52 theory 17:157 – 1 Section 26, CAMA, 2004 15 section 25, CAMA, 2004 16 section 22,
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Youth Entrepreneurship Education and Sustainable Economic Development: A Conceptual Review
Olajuwon Kamil A. & Awoyemi Samuel O.
Department of Business Administration & Management The Federal Polytechnic, Ado-Ekiti Ekiti State, Nigeria [email protected]
Abstract: This paper investigates the effectiveness of entrepreneurial education in repositioning the Nigerian youths for sustainable economic development. The major objective of the study is to investigate the roles of key entrepreneurship development education variables such as knowledge-based economy and enterprising culture on economic development variables such as creativity and problem-solving skills that focuses on repositioning Nigerian youths for sustainable economic stability. The research adopts the review of secondary data. The findings shows that entrepreneurship development education that targets the youths is a powerful tool for empowering the economic strength of a nation and as such, it is recommended that University education curriculum should focus more on educating Nigerian youths on the benefits of becoming acclaimed entrepreneurs. Keywords: Youth, sustainable entrepreneurship education, economic development.
Introduction the population to be as high as 186 As at 2012, the total population of million (WPR, 2018). A significant citizens in Nigeria as collected by percentage of this population has been Nigeria National Bureau of Statistics estimated to harbor people in their was around 166.2 million people, but in youthful age; this is the major reason for 2016, it was estimated to have over the concern of this paper about 178.5 million people, although United engrafting entrepreneurship attitude in Nations (UN) has projected the Nigerian youth population. A
64 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) business minded person that assumes entrepreneurs? How can Nigeria as a responsibility and risk for a business nation withstand the rigor for operation is called entrepreneur, while transforming Nigerian youths into the act of becoming an entrepreneur is vision oriented individuals that has the generally termed entrepreneurship. audacity to transform small, medium Education is needed to bridge the gap and large business entities into national between illiteracy and literacy; taking GDP enhancer? To provide answers to people from unknown to full awareness; these questions, this work examines the hence, entrepreneurship education is roles of entrepreneurship education in needed to allow the youths know what economic empowerment; the entrepreneurship is, and at the same significance of youths in economic time, the benefits of becoming an empowerment; constraints facing entrepreneur. Entrepreneurship entrepreneurship education in Nigerian education helps to imbibe the culture of tertiary institutions; strategies for entrepreneurship in the Nigerian youths, promoting effective entrepreneurship helping them to be financially education; significance of creativity, independent, creating employment skills acquisition and problem-solving opportunities for others and making the strategies as factors for engrafting nation grow economically. entrepreneurship in Nigerian youths.
Although the task of becoming an Literature Review entrepreneur is herculean, according to This section embodied the review of the Encarta (2009), “the entrepreneur major variables by authors, scholars and decides on the product, acquires the institutions, in order to explore the facilities, and brings together the labor major variables of this topic such as force, capital, and production materials. economic empowerment and If the business succeeds, the entrepreneurship development entrepreneur reaps the reward of profits; education. But first, is an overview of if it fails, he or she takes the loss”. The Nigerian youths in relation to National role of entrepreneur as an innovator, and development will be appropriate. a person who develops a new product, a Youths: The Strength of a Nation new market, or a new means of A youth is defined by Encarta English production was stressed by Schumpeter Dictionary (2008) as the period of (1934). Hence, the necessary questions human life between childhood and here are what do we mean by the terms maturity; it was as well described as a „youth‟, „entrepreneur‟, „economic state of being young. A youth is a young development‟, and „sustainable person whose age lies between the entrepreneurship education‟? What is period of 11 and 14 years. Youthful the usefulness of entrepreneurship period is evidenced in males by the development education in economic production of semen between the ages empowerment and why is it necessary to of 13 and 16. In both male and female, focus on the youths for economic it is shown by the enlargement of the empowerment? What are the possible external genitalia (Encarta, 2009). There challenges that Nigerian youths could is a consensus opinion that youth period face while willing to be empowered automatically terminates when with skills and competencies that would somebody married. According to Klepp, transform them into useful the average age at which people marry
65 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) in America was 26.8years for men and out investment opportunities, establish 25.1years for women (Klepp, 2000). business organisations and manage These averages are applicable also in business successfully for the purpose of Nigeria. gain. By this, there is a reward for the A report by National Population entrepreneur who owns or controls a Commission (2001) revealed that over business. Business Dictionary (2018) sixty five percent (65%) of the defined entrepreneurship as the capacity population is made up of young people and willingness to develop, organize, below the age of 35, by this, it can be and manage a business venture along said without missing words that with any of its risks in order to make Nigerian economy is youth dependent profit. The significant sign of but about eighty percent of these youths entrepreneurship is the starting of new are either unemployed or under– businesses by a person. In economics, employed, and by implication, one out when entrepreneurship is combined with of every three Nigerian youth is either land, labor, natural resources and unemployed or under-employed. Many capital, it can produce profit. There is observers have predicted that the the spirit of entrepreneurship, which is Nigerian Youthful Population is like a characterized by the zeal for innovation, timed-bomb waiting for the appropriate readiness to take risk, and it is an time to explode. The youthful period is essential part of a nation‟s ability to characterised by the essential times succeed in an ever changing and suitable for indoctrinating and training increasingly competitive global in entrepreneurship development marketplace. In the same light, Oviawe, education. It is the best time to lay the (2010), asserts that an entrepreneur is a foundation for economic empowerment person who in the bid (desperation) to through teaching Nigerian youths the survive owns his/her own business and concept of entrepreneurship because, in makes profit, effectively utilizes his/her no time will the youths of today become abilities and potentials confidently, tomorrow‟s parents, leaders and nation takes risks, focused and energized by an builders. inner drive. By this, entrepreneur
Entrepreneurship Education: A eventually becomes a person who Conceptual Review passionately seeks and curiously exploit One who chooses or assumes risks, business opportunities, meticulously identifies business opportunity, gathers apply creativity, fearlessly takes resources, initiates actions and initiatives, eagerly seeks, and establishes an organization or enterprise aggressively explore market opportunities for the gains thereof. to meet such demand or market opportunity is referred to as an Entrepreneurship education is entrepreneur (Anyakoha, 2006). In the conceptualised here as a system of words of Oviawe, (2010), the above formal teaching and learning about definition sees entrepreneur as an innovation, new product development, independent, self-sufficient individual new risk taking and profit making who is willing to sink or swim with strategies as conducted through schools his/her idea. In a nut shell, and other institutions ranging from entrepreneurship is the willingness, elementary schools to colleges, ability and zeal of an individual to seek polytechnics, universities and research
66 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) institutes in Nigeria. The procedural generation and income in the West grew process of becoming an entrepreneur exponentially by 20% in the 1700s, may be seemingly tasking and thorny; a 200% in the 1800s, and 740% in the willing individual must be able to 1900s (Drayton, 2004). The maximize given potentials through the unpredictable turns and profound discovery of new and existing business developments by which entrepreneurial ideas and use managerial principles and thought has evolved through history are practices to manage people and highly dramatic; this dramatic small/medium scale businesses until development is evident in local and such businesses become giant and international commerce, import and enviable cathedral of envy in its export trades, business competition and industry. Furthermore, nothing diversification, opportunity construct, empowers an entrepreneur more like research and new discovery mechanism creating the platform and embracing the offering new conceptualizations of what opportunities for exchanging business it means to be a true entrepreneur. ideas and training in skill and Murcko, (2018) was very precise when knowledge acquisitions. Thus, through he compared and concluded on the the process involved in Forbes‟ wealthy investors and entrepreneurship, competency skills for entrepreneurs by saying “There are entrepreneurism are learnt, success more entrepreneurs than investors on habits are developed and a person the Forbes list of wealthiest people, but develops entrepreneurial integrity. that doesn‟t mean entrepreneurship is
Sustainable Entrepreneurship necessarily a better wealth builder than Development Education investing. There‟s a selection bias in This topic is a divested concept from that entrepreneurs have much more sustainable development, and it can be concentrated asset allocation, often defined as the continuing commitment having nearly all of their net worth tied by individual entrepreneurs to harness up in their own company (and usually human and physical resources into a not able to sell it very quickly), whereas investors are more diversified…” hard-hit organisational unit that keeps nourishing and supporting economic Gap Identification empowerment by improving the quality According to the aforementioned, it has of life of founders, workforce and the been established that serious wealth can local communities, the world and future be created through entrepreneurial generations to come, with high sense of practices, and if this is the case, the ethical consideration and moral pertinent question is why then does the compliance on the part of the entrepreneurship nature of the nation organisations rendering the service. often glossed over (generally speaking) Sustainable entrepreneurship education in the youths? Is it because in our is an approach that targets business anxiety to meet our needs and become schools and large, often industrial wealthy in no time, we avoid the organisations. seemingly tasking and thorny subject of
Roles of Entrepreneurship Education entrepreneurship, and prefer the quicker in Economic Empowerment sale of easy life transforming Trend analysis has shown that investments that requires minimal risk, entrepreneurship per capita wealth or could it be due to lack of
67 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) entrepreneurship education? Or is it the established to accompany it as was inability to sustain teachings in evidenced in the Bible (Judges. 8:20, entrepreneurial development education 1Samuel 12:2, 17:55). By this, the in Nigeria? These are the questions that passage from youth to adulthood in demands answers if we must pave the some cultures is frequently way for poverty eradication especially acknowledged by ritual formalities among the youths, and redirecting their (Encarta, 2010). Therefore, the youthful focus to sustainable wealth creation period of the Nigerian population is strategies. very crucial for laying the foundation
Youth Empowerment for economic empowerment by injecting Empowerment is a socially conscious the spirit of entrepreneurship into them economic term that denotes measures through entrepreneurship training and designed to allow, and increase the development education. This will freedom of self-will and autonomy in provide a positive distractive alternative people, in order to enable them from the negative self-destructive and represent their own interests, and guided aggressive behaviours that are by their own decisions in a manner that frequently associated with adolescents and growing up (Woolfolk, 1998). will make them responsible and profitable in their immediate socio- Youth unemployment is as a result of economic environment. Empowerment youth‟s weaknesses in the area of is captured in this paper as a entrepreneurship. Its consequent effect consciously designed practical measure on the economic proficiency of Nigeria of resource-oriented intervention is evident in various crimes and social strategies, targeted towards promoting vices that has been on the increase since and increasing responsible youth mid 90s, these include among many engagement. It refers to the professional others, internet scam, prostitution, supports given to Nigerian youths, that money laundering, kidnapping, enables them recognize and use their militancy, armed robbery, drug and talents in overcoming financial child trafficking. These vices have been challenges and becoming self dependent linked to job scarcity and are common citizens. As a growing plant needs among the youths. They have negative nourishments, youths likewise need to consequences on the economic be empowered to grow economically, development of the country, and are in and invariably, making youth dependent every way standing on the way of nation like Nigeria become big and foreign investment as they do not strong economically. Nevertheless, promote favorable business there are a range of factors responsible environment needed for good business for physiological changes, usually transactions. Entrepreneurship marked by rapid growth in living education is seriously needed to beings; same makes the nature of enlighten the youths and help them out youthful experience and development to of the mystery of joblessness, crime and be greatly affected by factors such as murder. family, religious, cultural and economic Challenges Facing Entrepreneurship norms, and since youth age is the early Education in Nigeria time of life, sacramentally, fearfulness, Economic prosperity can be highly followership and optimism has been influenced by the gamut of attention
68 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) given to entrepreneurship education. with experienced adults. It is a painful The prosperity of a nation comes at thing to know that some youths further significant cost; this means that the their education and acquires post concept of opportunity cost and graduate degrees but all to no avail. alternative forgone is also applicable to After a lot of struggle for job, time economic prosperity; hence, the cost passes and age sets in, leaving the incurred in educating the youth in unemployed with no choice than to entrepreneurship education is a result to social vices and other criminal profitable one. Many factors hinder acts for survival and livelihood. entrepreneurship education in Nigerian Strategic Factors for Engrafting institutions; the tendency to avoid cost Entrepreneurship Education in of entrepreneurship education is one Nigerian Youths major challenge in Nigeria. Other Business world is becoming more challenges according to Oviawe (2010) complex and tremendously dynamic, include “poor knowledge based hence, the need for calculative and economy and low spirit of competition, perfect decision making at every stage poor enterprising culture, lack of of business transactions for any would- entrepreneurship teachers, materials be entrepreneur. The market place is and equipment, unavailability of fund, often characterised with sensitive and non-inclusion of entrepreneurship intense competition, giving little or no programme in the school curricula, tolerance for miscalculations, poor societal attitude to Technical and misappropriation or misinterpretation Vocational Education development, that could amount from inadequate facilities and equipment for entrepreneurship incompetence. The teaching and learning, insensitivity of aforementioned makes youth‟s government to enterprise creation and entrepreneurship education an essential expansion strategy, poor plan and ingredient for economic success, in execution of processes for action, and view of this, the following factors are isolated pockets of ineffective highly essential in implanting programmes and management entrepreneurial traits in Nigerian youths: incompetence”. Intensive Entrepreneurship Programme Another major problem facing in School Curricula entrepreneurship education in Nigeria is Many experiences on entrepreneurship the employment seeking nature of can be gained from higher institutions Nigerian youths. Many Nigerian youths using the curricula as a strategic are either employment dependent or medium. By-projects such as “Making focused, and it is common practice for CEO”, “Letting Loose the Giant employers to ask for work experience Within”, “Soaring with Eagles”, before employees could be employed. “Swimming with Sharks”, “Hunting But it is unfortunate that most graduate with Lions” etc can be organised in youth have nothing more than the collaboration with commercial banks certificates that showcase their and NGOs to educate millions of professions or discipline, they move undergraduates on the benefits of self– about searching for job with no work employment, ethics of business and experience, and by that, the struggle for qualities of good business leaders. employment becomes a serious rat race
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Maintaining Comprehensive School in school curricula, maintaining Curricula: The school curricula should comprehensive school curricula and endure to outline syllabus such as organising workshops and seminars, Industrial Design, Organisational creativity and problem solving skills can structuring and practical application of be induced in the youths which will entrepreneurial and business courses them in knowing how to think using computer graphical application productively, example is the ability to like Corel Draw, AutoCAD e.t.c. With transform waste to wealth For example, this type of programmes, candidates most drainage systems in Nigeria have could be encouraged to start small like been blocked by water sachet and other opening studios (like art and non – biodegradable particles resulting photographic), salons (like barbing and in water logging on the street of most hairdressing) and shops (like retail and cities in Nigeria. It has been discovered others) immediately after graduation that water sachets could be used in instead of scrambling around for salary making candles, lubricating grease, shoe jobs after school. polish and other products. With little
Organising Workshops and Seminars: help towards creative innovation, youths Other areas of concern for the schools could be orientated on how to gather should be workshops and seminars. these water sachets and use the These are one of the best ways to knowledge gathered through workshops educate the young people, especially and seminars to transform these wastes to wealth. when it includes teaching them techniques of fund-raising and financial Recommendations literacy at their tender age. Knowledge This work recommends that intensive gained from workshops and seminars entrepreneurship programme in school could be used by participants at any curricula should strictly be adhered to point of their lives in creativity, skills while maintaining comprehensive acquisition and problem solving school curricula in Nigerian higher strategies. institutions. Workshops and seminars
should be organised continually and on Research Methodology a regular basis to enhance creative The methodology adopted in this thinking, skills acquisition and problem research work follows two solving skills of Nigerian youths. By complementary tenets: conceptual and doing this in all citadel of learning, a historical review of literatures basically roadmap towards the use of youth for conceptual and historical entrepreneurial skills in developing the knowledge. economic capacity of Nigerian nation Discussions of Findings would be paved. It has been discovered that through intensive entrepreneurship programme
References Brandon S., (2000): Power BibleCD, Anyakoha, E.U. (2006): Practical Tips [email protected], Online for Economic Empowerment and Publishing, Survival, Inc. 127 N. Matteson Street PO Box 21, AP Express, Nsukka. Bronson, MI 49028, [email protected]
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Klepp, S.E., (2000): United States 1Samuel 12:2: And now, behold, the People. “Microsoft Encarta (2009) king walketh before you; and I am [DVD]”, old and Redmond, WA: Microsoft Corporation, grayheaded; and, behold, my sons are 2008. with you: and I have walked before Murcko, T. (2018): Web Finance Inc., you from my youth unto this day. www.webfinanceinc. 1Samuel 17:55: And when Saul saw Oviawe, J.I. (2010): Repositioning David go forth against the Nigerian Youths for Economic Philistine, he said Empowerment unto Abner, the captain of the host, through Entrepreneurship Education, Abner, whose son is this youth? European Journal of Educational And Abner said, As thy soul liveth, Studies 2(2), 2010 O king, I cannot tell. Schumpeter, J.A. (1934). The Theory of Judges 8:20: And he said unto Jether his Economic development – An first-born, Up, and slay them. But Inquiry the into Profits, Capital credits, Interests youth drew not his sword; for he feared, and the Business Cycle, Harvard because he was yet a youth. University Press, Cambridge. Web Resources Woolfolk, A. (1998): Educational http://www.businessdictionary.com/defi Psychology. 7th edition, New nition/entrepreneurship.htm York: Allynt Baan. http://www.worldpopulationreview.com Bible References (all Bible References /countries/nigeria-population are from King James Version) Microsoft Encarta (2009). © 1993-2008 Microsoft Corporation.
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Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2, September 2018
An Open Access Journal Available Online
Effect of Logistics, Supply Input, Production and Finance on Small and Medium Enterprises (SMEs) Performance in Kaduna State
Ogundare Jermiah Ayodele Taiwo1 & Alalade Omolola Olufunke2
International Centre of Excellence for Rural Finance and Entrepreneurship Ahmadu Bello University, Zaria [email protected] [email protected]
Abstract: This paper examined the effect of logistics, supply input, production and finance on small and medium enterprises performance in Kaduna State. Questionnaire was distributed using stratified sampling. 174 copies of the questionnaire were used for the analysis with a population of 201 registered owners/manager of SMEs operating within the state. PLS-SEM path modelling were used to process data. Findings reveal that logistics, production as well as finance has significant effect on SMEs performance, while supply input has negative and insignificant effect on performance of SMEs. The study concludes that logistics, production, supply input and finance is important to improve SMEs performance. The study therefore Recommends that the Government pay more attention to the development of the value chain to reorient the SME sector and implement a new strategy based on the principle that SMEs are a business that can provide a reasonable basis for greater wealth, growth employment and improves the capacity of the country to earn foreign currency through small and medium enterprises. Keywords: Logistics, Supply input, Production, Finance, SMEs, Performance.
Introduction issue dominating policy debates around Small and Medium Enterprises (SMEs) the world and Africa has been to induce are widely acknowledged as the key economic growth through the growth of engine of economic development SMEs. SMEs contribution to the (SMEDAN & NBS, 2013). A central Nigerian economy is essential for the
72 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) accomplishment of the broader guarantee the efficiency of the delivery development objectives such as poverty of finished products to the clients relief, spreading of employment (Kwateng, Manso and Mensah, 2014). opportunities and increasing indigenous Post-harvest losses due to inadequate ownership of resources in the economy transport and storage account for 30% (Chidoko, Makuyana, Matungamire & of production in developing countries, Bemani 2011). Small and Medium Scale which undermines improvements in Enterprises (SMEs) contribute about productivity and reduces returns for half of Nigerian GDP and accounts for producers to invest in new mechanized over 25 percent of employment in the techniques that will increase country (SMEDAN & NBS, 2013). productivity (Fernandez-Stark, 2013).
There are 17 million SMEs in Nigeria, The input supply depends on the employing 32.41 million persons and specific agricultural product, in general contributes about 48% to the nation‟s the important inputs for production are Gross Domestic Product in nominal typically land, seeds, fertilizers, terms (SMEDAN & NBS, 2013). This chemical products for agriculture sector is responsible for most of the (herbicides, fungicides and pesticides), advances in new products and process agricultural equipment and equipment and provides most of the employment for irrigation and water. Other pre- opportunities, as a central indicator of production services include extension the overall operation of an economic services, market information, credit and system (Enterprise Baseline Survey certification for production in other 2012). high-value markets (Bamber,
Performance as ability of an Abdulsamad & Gereffi, 2014). organization to achieve set objectives Underdeveloped input markets can limit such as high profit, quality product; the use of fertilizers, drought and large market share, good financial disease-resistant seeds and greater outcomes and survival at predetermined mechanization, which contributes to low time using relevant strategy for action. productivity, which is a major problem Thus, performance can also be in many countries in Africa (Alliance employed to consider how an for a Green Revolution in Africa). Poor organization is performing in terms of access to credit and information along market share, volume of products, with poor infrastructure can weaken this customer‟s demand, loyalty and demand (Banful, 2011). investment. (Obiwuru, Okwu, Akpa & The production phases involve a Nwankwere 2011). Consequently, combination of physical transformation Wang (2010) is of the opinion that and the participation of various performance is seen as product manufacturers and services. Contrary to accomplishments, results and the traditional and exclusive approach to achievements in an organization. production, the concept emphasizes the
Logistics is the physical distribution that importance of adding value in each attempts to systematically manage a set stage, so it treats production as one of of related activities that include the various added value components of transportation, distribution, storage, the chain. It is said that production is finished products, inventory levels, not complete until the goods produced packaging and material handling to reach the final consumer.
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Finance is an important factor to of value chain development on consider in the development of the value performance empirically, but so far, chain, all phases require financial result have yielded mixed findings that contributions to function effectively. are inconclusive and contradictory. Access to credit lines (Labaste and Therefore, this study tend to look at Webber, 2010) should be allowed to effect of value chain development (input improve the quality inputs, processes supply, finance, production and and production of agribusiness logistics) on performance of Small and resources. Value chain approaches, such Medium Enterprises in Kaduna State. as quality production, market access and Research Hypotheses other forces of supply and demand, H01: Input supply has no significant depend on availability and access to effect on performance of SMEs in finance. Mitchell and Shepherd (2006) Kaduna State. have argued that to support and increase H02: Logistics has no significant effect productivity, credit services should be on performance of SMEs in Kaduna available to farmers in order to invest in State. quality inputs. Kouwenhoven, H03: Finance has no significant effect on Lossonczy and Nalla (2005) said that performance of SMEs in Kaduna State. credit lines increase the production and H04: Production has no significant effect supply of agricultural products in an on performance of SMEs in Kaduna economy. State
The backbone of any nation‟s industrial 2. Literature Review development is entrepreneurial activities 2.1 Theoretical Framework this can be certify with the economic This study is underpinned by the porter breakthroughs of the Asian Countries theory of competitive advantage. The (Wang, Walker & Redmond 2011). theory supports the use of a value chain Agreeing to a report by Small and strategy and prudent practices to Medium Enterprise Development improve performance in an organization Agency of Nigeria SMEDAN (2013), (Porter, 1990). Porter's competitive 96% of SMEs in Nigeria still operate as advantage revolves around design, micro businesses and only around five finance and the production market, the to ten percent of start-up companies supply of products and the support of survive and develop to maturity the company's products. Porter's SMEDAN (2008). Thus, Omolomo, competitive advantage theory Odunayo and Tobora (2014) indicated distinguishes between; primary that irrespective of country, more than activities (Grant 1991) and support 50% of SMEs collapse within their first activities (Porter, 1985). The main five years and about 25% go bankrupt activities include; logistics of entry, or fold up in Nigeria. The crucial role of operations, exit logistics, marketing, value chain development to the growth sales supplies and service in the main and survival of SMEs in Nigeria is organization that creates value directly. pivotal. It is therefore important to study While the support activities are the extent to which value chain production, finance and solid development enhances Small and infrastructures that support the creation Medium Enterprises performance. There of companies in the main organization are various studies emerging on effect (Porter, 1985). The competitive
74 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) advantage leads to explain the role 2.3 Logistics played by logistics, supply of inputs, The systematic attempt and physical finance and production, thus promoting distribution that manage a series of the ability of companies to compete in a related activities, such as transportation, particular sector. Porter's competitive distribution, storage, finished products, advantage theory, applied in an inventory levels, storage, packaging and organization, is limited to material handling to guarantee the recommending the use of appropriate efficiency of the delivery of finished commercial strategies and prudent products to customers, it is linked to practices to improve performance logistics (Kwateng, Manso and Mensah, (Porter, 1990). The competitive 2014). However, Fernández-Stark, advantage theory will glue the four (2013) losses of small and medium independent dimensions (supply entry, enterprises due to inadequate planning, production, finance and logistics) with transport and storage account for up to the actions in this proposed conceptual 30% of small-scale activities in framework. developing countries, undermining
2.2 Concept of Performance improvements of performance and Iskandar, Ahmad and Martua (2014) investment entrepreneurs in new describe performance as elements that mechanized techniques that will lead to performance can be evaluated through the level of their productivity. This includes the 2.4 Supply Input quality, quantity, knowledge or The supply of inputs depends on creativity of the individual towards specific agricultural products, in complete works that are in accordance general, evaluates land, seeds, with the responsibility during a given fertilizers, agrochemicals such as period. Armstrong (2009) also defines herbicides, fungicides and pesticides, performance as an evaluation of an agricultural equipment, water and organization through product, product irrigation equipment are important quality, productivity, cost management, factors for production Therefore, pre- safety and health, the relationship and production services include extension the development of services, market information, credit and employees.Understanding determinant certification for production in other factors of SMEs performance is high-value markets (Bamber, considered an important area of focus in Abdulsamad and Gereffi, 2014). Enterprises (Rosli, 2011). However, However, the market for inadequate Anastasia (2008) viewed organizational inputs can curb the use of fertilizers, performance measurement construct as drought and disease-resistant seeds and effectiveness, efficiency, satisfaction greater mechanization, which and innovation of product. Also, Apolot contributes to low productivity, which is (2012), organizational performance in a major problem in many countries in sales growth, customer‟s satisfaction Africa (Alliance for a Revolution green and profitability were measured in their in Africa). . business. Therefore, this study adopts 2.5 Production the definition as opined by Apolot The production phase basically consists (2012). of a combination of physical transformation and participation of
75 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) various producers and services. The secondary and focused attention on production phase, in contrast to the those manufacturing companies quoted traditional exclusive attention to in the Nigerian Stock Exchange which production, emphasizes this concept on is commendable. Muhammed, Ali, the importance of adding value in each Qayyum and Shazad, (2012) examined phase, so it treats production as a phase the impact of supply chain management between the different added value on the overall performance of an components of the chain. However, it is organization. About 30 copies of the said that production is not complete questionnaire were distributed among until the goods produced reach the final the managers of the two organizations consumer. who should have a better understanding
2.6 Finance of supply chain operations and their Finance is considered a key factor in the impact on the overall performance of development of the value chain, since the organization; all responded all the phases require financial positively. It has been discovered that contributions to function effectively in the dimensions associated with SCM are order to improve the quality important for the overall performance of contribution, the processing and the the organization. The sample size of the production of resources. Value chain study is small and grossly inadequate to approaches, such as quality production, have a fair findings. Titianne, (2013) market access and other forces of supply assessed The drivers of the business and demand, depend on availability and value chain, in particular, access to access to finance. Mitchell and incentives (finance), training and access Shepherd (2006) say that to support and to production resources have influenced increase productivity, credit services the performance of smallholders within should be available for small and the milk supply chain. A semi- medium enterprises to invest in quality structured questionnaire was the main inputs. Kouwenhoven, Lossonczy and tool used to collect primary data. The Nalla (2005) said that lines of credit study showed that the training improved increase growth and can lead to the the performance of the small owners survival of small and medium more; this was followed by access to enterprises in an economy. incentives and, therefore, production resources.The study only look at 2.7 Empirical Review smallholder‟s dairy farmers, thus Akenbor and Okoye, (2011) examined findings cannot be generalized for small the impact of the value chain analysis business. Mutuerandu and Iravo, (2014) on the competitive advantage of evaluated the level of implementation of manufacturing companies in Nigeria. SCM practices at Haco Industries Ltd. The study data was collected through The four key dimensions of SCM secondary sources, such as the annual practices (strategic supplier reports of companies of several years associations, customer relations, and the Statistical Bulletin CBN 2009. information exchange and training The results revealed that the analysis of practices) were used as independent the value chain has a positive but variables, while what market / business insignificant impact on the competitive and operational performance were used advantage of a manufacturing company to measure organizational performance. in Nigeria. The study made use of
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The results of the study revealed that methods of the application. Descriptive there is a high level of practical scaling of any correlation based on the implementation of SCM practices at modeling of structural equations (SEM). Haco Industries Limited. Only findings The results of the research indicate that were reported in the study, data analysis the practices that influence the influence was not reported. Karimi and Rafiee, of supply chain management on the (2014) investigate the adoption of Iranian pump company are applied, supply chain management practices in according to the priorities of the the performance of the organization competition.Instrument were tested through competitive priorities. This using rigorous statistical tests research is based on the objectives and
Model for the Study
FINANCE
SUPPLY INPUT SMEs PERFORMANCE PRODUCTION
LOGISTICS
The model describes a relationship SMEs was obtained from SMEDAN in between the variables that influence the Kaduna State branch office. performance of SMEs in the state of The size of the study sample was Kaduna. The framework has been tested determined using the formula suggested to demonstrate whether the performance by Yamane as cited in Israel (2013). of SMEs is a function of the The study arrived at one hundred and independent variable. thirty-four (134) as sample size.
3.0 Methodology However, to take care of response bias This study adopts cross-sectional survey and improper filling of questionnaires design. It was adopted because it is an by some respondents, 30% was added to applicable designed to obtain relevant the minimum sample size as suggested information about the current state of by Israel (2013) bringing the sample things (William, Brown & Onsman, size to one hundred and seventy four 2010). The population of the study (174). consists of 201 SMEs that operate their The data was obtained through the use businesses within Kaduna State and are of self-administered questionnaires for registered with SMEDAN as at the respondents. This study used the November, 2016. The respondents of stratified sampling technique to this study are owners/managers of the distribute copies of the questionnaire to SMEs in Kaduna. They are selected the three senatorial districts in the state; because of their knowledge and Central Kaduna, North Kaduna and familiarity with the running of their own South Kaduna. The study included a establishment. The list of registered
77 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) representative sample of companies in external and internal model. There are the four secondary activities. four common criteria to evaluate the The questionnaires used for this study external model in the following way: were adapted by several authors. The unidimensionality, reliability, entry questionnaire for the supply was convergent validity and discriminant adapted by Muhamad et all (2012) with validity. The second stage was used to 5 articles, the logistic questionnaire was evaluate the goodness and adaptation adapted by Wisner (2013) with 5 hypotheses in the proposed research articles, the questionnaire on production framework. The criteria for evaluating and finances was adapted by Titianne the external model are the following; (2013) with 5 entries. While the coefficient of determination (R-Square, performance questionnaire was adapted R2), trajectory coefficient and effect by Apolot (2012) with 11 entries. size (f2).
The study uses the Partial Minimum 4. Results Square (SmartPLS2) to analyze the data To ascertain the reliability and validity and followed the two-stage approach for of the instruments used for data the evaluation of the measurement collection, the measurement model was model and the structural model, calculated using PLS-SEM path respectively. In accordance with the modelling. Table 1 represents the suggestions of Urbach and Ahlemann reliability and validity of latent (2010). This study tested the criteria and variables of the study. important processes to estimate the
Table 1 Construct Reliability and Convergent Validity (Measurement Model) n=174
Construct Items Loadings AVE CR Firm Performance FP1 0.83 0.58 0.87 FP2 0.90 FP3 0.81 FP9 0.50 FP11 0.69 Logistics LG1 0.65 0.65 0.88 LG2 0.94 LG3 0.96 LG5 0.62 Production and Finance PF1 0.77 0.60 0.82 PF2 0.76 PF3 0.79 Supply Input SI1 0.88 0.56 0.83 SI2 0.71 SI4 0.76 SI5 0.62 Note: AVE represents Average Variance Extracted; CR represents Composite Reliability. FP4, FP5, FP6, FP7, FP8, FP10, LG4, PF4. PF5, SI3 were deleted because of their insufficient loadings.
Table 1 show the reliability and validity reliability and convergent validity of of constructs of the study. Construct constructs were tested using composite
78 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) reliability and Average Variance (i.e., 0.5), composite reliability (i.e., 0.7) Extracted (AVE) as suggested by and AVE (i.e., 0.5). Therefore, it is Garson (2016). Composite reliability assumed that the items on Table 1 coefficient should be ≥ 0.7 also (Lee & displayed reliability and convergent Chen, 2013), while AVE coefficient validity. The data were next subjected to should be ≥ 0.5 (Garson, 2016). Item discriminant validity test using fornell- loadings should be above 0.5. On Table larcker criterion. The result is presented 1, it is seen that all of the items met the in Table 2 minimum bench mark for item loadings .
Table 2: Discriminant Validity using Fornell-larcker Criterion. (n=174) 1 2 3 4 1 Logistics 0.81 2 Production and Finance 0.28 0.77 3 Performance 0.64 0.41 0.76 4 Supply Input 0.08 -0.11 -0.15 0.75 Note: The bolded numbers represents the square root of the AVE of each latent construct.
AVE was used by the study to establish square roots of the AVE of each discriminant validity using the Fornell– construct are higher than their Larcker criterion. For discriminant correlations with other latent construct. validity to exist, the square root of the Going by the fornell-larcker criterion, AVE should be higher than its the data exhibited discriminant validity. correlation with other latent variables The study next tested the hypotheses of (Garson, 2016). On Table 3, the bolded the study by calculating the structural numbers represent the square root of the model, bootstrapping the samples 5,000 AVE of each latent construct. The times.
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Figure1 Structural Model Table 3: Test of Hypotheses Relationship Beta SE t statistics P Value Decision Coefficient LG -> FP 0.59 0.05 11.31*** 0.00 Rejected
PF -> FP 0.22 0.07 2.99** 0.00 Rejected
SI -> FP -0.17 0.12 1.38 0.17 Fail to Reject
R Square 0.497
Note: LG represents Logistics; PF represents Production and Finance; SI represents Supply Input; FP represents Firm Performance.
Table 3 presents information on the test lead to 59% increase in firm of hypotheses. Two of the three performance. Production and finance formulated hypotheses are supported, has significant effect on firm while one was not supported. From performance also at less than 1% (β = Table 3, it is seen that logistics has 0.22, p<0.01). Finally, supply input has effect on firm performance, significant negative but insignificant effect on firm at less than 1% (β = 0.59, p<0.01). That performance (β = -0.17, p>0.10) is to say, a unit increase in logistics, will
Table 4: Effect Size of Exogenous Variables Construct f2 Effect Size Logistics 0.62 Large Production and Finance 0.07 Small Supply Input NA NA Note: NA means Not Applicable
The study further tested for the effect firm performance is 0.62, this means size of the exogenous variables on the logistics has large effect on firm endogenous variable of this study using performance. Production and finance f2. According to Cohen (1988), f2 values has an f2 value of 0.07, this means of 0.02, 0.15, and 0.35, represents small, production and finance has a small medium, and large effects respectively. effect on firm performance during Table 4 show the effect size of each of periods of economic recession. Supply the exogenous variables in the present input on the other hand has no effect on study. The effect size of logistics on firm performance.
Table 5: Construct Cross-validated Redundancy (Q2) Construct SSO SSE Q2 (=1-SSE/SSO) Firm Performance 805.000000 615.705016 0.24
The Stone-Gleisser Q2 value was used A Q2 value of 0.02 represents a small to the predictive relevance of the model. effect size, 0.15 represents a medium
80 Covenant Journal of Entrepreneurship (CJoE) Vol. 1 No.2,Sept. 2018 (Special Edition) effect size, and 0.35 represents a high chain is considered a tool to coordinate effect size (Cohen, 1988). From Table and facilitate small and medium 5, it is seen that the Q2 value of firm enterprises and the provision of performance is above 0. More precisely, investment services. However, finance the Q2 value of firm performance is as part of the value chain is important 0.24, this means the independent for the sustainable expansion of small variables of this study has a medium and medium enterprises. Therefore, the degree of predictive relevance with study concludes that a well-developed regard to firm performance. value chain allows SMEs to carry out
Discussion of Findings their activities in an appropriate manner Previous studies have considered value and thus generate employment, wealth chain development and its component creation and human capital development. such as logistics, input supply, production and finance in general. But The study recommends that the have largely ignored to study the government pay more attention to the component separately. Consequently, to development of the value chain to focus fill this knowledge gap, this study the SME sector and implement a new empirically examined the effect of strategy based on the principle that logistics, input supply, production and SMEs are a company that can provide a finance separately. Based on the result, reasonable basis for greater wealth, it is reveal that logistics, production and Employment growth and increase the finance has a positive and significant country's ability to earn foreign effect on performance of SMEs. While currency through small and medium input supply was found to have a enterprises. negative but insignificant effect on SME 6. Suggestions for Further Study performance in Kaduna State. The study was limited to only SMEs 5. Conclusion and Recommendations operating within Kaduna state. Based on the findings of the study, the However, SMEs may differ in different study concludes that, logistics, state in the country. Thus, replicating production and finance has significant this study would enable better effect and lead to increase in firm generalization of findings. Further performance while supply input has studies should be conducted using other negative but insignificant effect on firm dimensions such as marketing performance. Thus development of the evaluation, recycling research and value chain is important to improve the development (R&D) among others. performance of the company. The value
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