ENTREPRENEURSHIP EFFECTIVENESS IN SMALL SCALE INDUSTRIES (A CASE STUDY OF SMEs on selected firms in Enugu state Nigeria)

ABSTRACT

The development of SMEs has become an important factor in nation’s building and economic development. While developed nations have leveraged on the growth of SMEs, survival rates has been less than 10% in Nigeria despite various government intervention programmes. This study evaluated the effectiveness of Entrepreneurial effectiveness  on the development of SMEs on selected firms in Enugu state Nigeria.

Survey research design was adopted for the study. The population of the study consist of 2425 middle and top level staff of 7 selected firms. Stratified random sampling technique was adopted to select the sample size of 446. Respondents were determined using Taro Yamane formula for sample size. Data was collected using self-administered structured questionnaire and validated for a response rate of 94%. Cronbach Alpha reliability for major constructs had an average value of 0.83. The data collected was analysed using linear and multiple regression.

Findings revealed that there is a significant relationship between Entrepreneurial effectiveness  and SME development (R = 0.535, at p<0.05).The adjusted R² =.285 value (alpha) of 44.670, the coefficient of independent variable (beta = 0.491) and F-Value yielded 163.890. Competitive strategy had significant relationship on return on investment and this effect was statistically significant at (R² = 0.160, p < 0.05, B = 0.360, F = 77.727). There is a significant relationship between human resource strategy and employee productivity (R² = 0.184, p < 0.05, B = 0.385, F = 91.833). The effectiveness of market orientation strategy on market share shows a positive relationship with p < 0.05, R² = 0.242, B = 0.395and F = 130.155. A positive and significant relationship was established between adaptation strategy and business policy with R² = 0.553, p < 0.05, B = 0.717 and F value = 504.339.

The study concluded that, Entrepreneurial effectiveness  have strong positive relationship on the development of SMEs in Enugu State. The study recommends that SMEs should adopt Entrepreneurial effectiveness  in the form of competitive, human resource, market orientation and adaptation to increase survival rate.

CHAPTER ONE

INTRODUCTION

In the past, university graduates had choices of good government jobs with car loans waiting for them on graduation. The segment of the society who got into private business were either the non-graduates or those who are business included and decided to care a niche for themselves in the private business world. Others who may have a family pedigree of success in business practice took to it as of choice.

Today, it is different hence many are forced into self-employment out of desperation and non-availability of white – collar jobs. This research work was therefore focused on the entrepreneurship effectiveness in small scale industries. Meanwhile, the outcome of the research was focused on to prepare our respective minds and like to entrepreneurship as choice rather than out of desperation hence it has created a great light in our country’s (Nigerian) economy.

The roles of small scale industries in the growth of put economy cannot be over-emphasized. This has been the singular reason why both government, groups and individuals in business always play greater emphasis on the unique human activity. This also accounts for it’s dominating prominence in governments policy statements. Many multi-national or even supra-national business today started as small scale business. This therefore implies that small scale is the beginning of every big business.

The present day America is the richest country in the world judging by their economy. The history of industrialization in this “Gods’ own country” has show the absolute importance of small scale industries in the economy and scheme if things. Carefully study and investigation has revealed that in America, only 1/10 of the total number of firms in the economy employ more than 2,500 workers. It was also further shown that 89 of the total firms in the economy employ less than 100 employees, and 65% having less than 20 employees in their payroll. As a standard of judgment, using number of employees, this has at least proved that in-spite of her economic glory, America is not land of giant corporations. Many countries of today like south Korea, Taiwan, Honking and Singapore are making enormous successes in the world export industrial market as a result of emphasis on small scale industries.

As a way out, the efforts of every segment of the Nigerian government for small scale industries enhancement cannot therefore be surprising. Thus, our past administrators, national planners and development project initiators cannot excuse their lack of careful planning in this regard. Therefore, following the result of these failures in our national development and planning strategy, the continue ineffectiveness of our small scale industries have prompted the reason for this work. The research work therefore was on attempt to look into a key and embodying factor in small-scale industrial effectiveness. The scope of the project was limited to a case study of Macon’s Bakery Industry in Enugu State capital.

The general opinion revealed that in spite of it’s key rotes and functions in the success of any ventures of business, adequate entrepreneurial impact has neither been felt nor marched and growth. Investors have not show commendable interest to accept entrepreneurial rate. In spite of all this, there are still multifarious prospective areas in the manufacturing, merchandising and service sectors of the economy that exist, this was actualized through the various efforts made by the government, private individual, industrial agencies toward inducing small scale enterprises. For effectiveness, there is need to make adequate appraisal of entrepreneurial role towards funding of the enterprises to actual managing. These measures will ensure that the reward profit is admired by the entrepreneur.

As said earlier, small was the beginning of large scale. The efforts on small-scale enterprises were stepping – stones to large scale corporation. prosperous individual like Ekenedilichukwu, Ifesinachi, Dantata, Hamza, Adebowole, Sanusi to mention but a few started as small scale industries / business. It should be a waste of time for one to keep waiting for large capital to accumulate before establishment, thus the statement “From Grass to Grace”.

Taking the manpower and development needs of this country into consideration, any capital savings must be re-invested for further capital formation in the best way for multiplier effect on the economy towards small scale enterprises promotion. In effect, our dreams will come to fruition if the necessary linkage between small scale and small scale entrepreneurship.

1.1     GENERAL BACKGROUND FO THE STUDY

The idea being that the glory of any economy, whether industrialized or underdeveloped depends very much on how well organized and managed the small scale industries are. Given this fact, most of the developed countries of the world are champions of small-scale industries.

Actually, the central objective of small-scale enterprise is to make profits for the owner or manager / entrepreneur for expansion purposes. As a result, there should be equilibrium between the goals of the manager and those of the workers to achieve a desired psychological, economic and entrepreneurial effectiveness. Therefore, profit is a reward for an effective entrepreneurship, it has been theorized that integrated industrial development is a foundation to small scale industrial development which consequently act as acid test for entrepreneurship effectiveness.

Therefore, government being very keen has to establish the pace of industrial finding and management to attain the much-needed entrepreneurial development and enterprises in small scale should also be considered by the government.

Furthermore, entrepreneurship effectiveness is a primary function of ventral personal evaluation to determine entrepreneurial qualities. Innovative capabilities and the intended result. The combination of entrepreneurial quality, taking decisions creativeness ingenuity, innovative mind and skill, minimizes the risk and optimizes profit or reward.

It has therefore, based on the above established facts of entrepreneurial and small business circumstance that project writers intend to build some of the assumptions underlying the project topic.

STATEMENT OF PROBLEM

Macon’s Bakery Enugu lacked working capital for optimal daily production. Macon’s Bakery Enugu also lacked the three organic functions of management (planning, organizing and control for easy’ management. Macon’s Bakery Enugu lacked enough space (accentuation) to enable them, store every necessary equipments needed for mass and fast production.

The industry also lacked current and sound technology for easy creation of utility. Above all, the industry was that not in any manner conscious of time to enable them catch their customers yond.

 Objective of the Study 

The main objective of the study is to evaluate the impact of entrepreneurial strategies on the development of SMEs in Enugu State, Nigeria. The specific objectives are to:

1. examine the effectiveness of competitive strategy on Return on Investment;
2. identify the effectiveness of human resources strategy on employee productivity;
3. evaluate the effectiveness of market orientation strategy on market share;
4. determine the effectiveness of adaptation strategy on business policy and
5. examine the effectiveness of Entrepreneurial Strategies on SMEs development.

Research Questions

The study answered the following research questions:

1. What is the effectiveness of competitive strategy on Return on Investment for SMEs development?
2. How does human resources strategy affect employee productivity for SMEs development?
3. What is the effectiveness of market orientation strategy on market share for SMEs development?
4. What is the effectiveness of adaptation strategy on business policy for SMEs development?
5. How does Entrepreneurial Strategies affect SMEs development?

Hypotheses

The hypotheses for the study are as follows:

H₀₅:    Entrepreneurial Strategies has no significant effect on SMEs development.

 SIGNIFICANCY OF THE STUDY

Entrepreneurship effectiveness in small scale industries is not merely a matter of enterprises. The underlying interest is to improve industries. It cannot be agued that the significance of the study was for academic requirement but must be borne in mind that learning institution were established to produce capable entrepreneurs for the efficiency of small scale industries.

At the end of this work, a significant effort will highlight the ideal circumstances for entrepreneurial effectiveness. The organizational risk learners as well as risk mangers would be opportune to avoid themselves of such, the prospective enterprises could make themselves available with materials that could broaden enlightenment on entrepreneurial risk path.

Truly, the awareness of this work is bound to create would no doubt stimulate self-employment among our young and potential graduates induces small scale entrepreneurial growth as well as promotes the productive capacity of our economy.

Therefore, this studied the economic and business needs of our people. It is significantly enlightenment into small scale business and potential of entrepreneurial personality for effectiveness.

SCOPE AND LIMITATION OF THE STUDY

This study investigated entrepreneurial effectiveness and SME development in Enugu State. The state was chosen because of its position as second to the least state in south west Nigeria in terms of SMEs development (National MSME survey report, 2013).

DEFINITION OF IMPORTANT TERMS

ENTREPRENEUR: An entrepreneur is one who plans, organizes and manages a business. He is the undertaker of entrepreneur personality. He has a financial commitment and assumes all the risk in the business. His reward for effectiveness is optional profits.

ENTREPRENEURIAL AND ENTREPRENEURSHIP: This means the skill process and act of assuming an entrepreneur. It is also a way of introducing new ideas in responses to one’s situation or simply a creative innovations.

EFFECTIVENESS: This implies the ability to produce the intended or actual result, being efficacious and efficient.

ENTREPRENEURSHIP EFFECTIVENESS: This means a situation whereby ventures are backed up with adequate analysis of entrepreneurial personality or qualities towards the business, thereby making a desirable profit in equity. It also connotes adequate entrepreneurial stimulation setting up an eventual managing.

SMALL SCALE INDUSTRIES: These are those industries which have an independent management, owners supplied capital, mainly local areas of operation, relatively small within the industries. Small scale industries are generally how in terms of number of people or persons employed and in the amount of investment and annual business turn over. Infact, a small scale industry seems less systematic and formalized than what can reasonably appear a medium or large scale industry.