EDUCATIONAL QUALIFICATIONS OF ENTREPRENEURS AND PERFORMANCE IN SMALL AND MEDIUM SCALE ENTERPRISES IN LAGOS STATE NIGERIA.
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EDUCATIONAL
QUALIFICATIONS OF ENTREPRENEURS AND PERFORMANCE IN SMALL AND MEDIUM SCALE
ENTERPRISES IN LAGOS STATE NIGERIA.
ABSTRACT
The study examined the effect of educational qualifications
on entrepreneurs and performance of small and medium scale enterprises in
Mainland Local Government Area of Lagos State, Nigeria. In this study, relevant
and extensive literatures were reviewed under sub-headings. The descriptive
research survey was used in the assessment of the opinions of the selected
respondents with the adoption of the questionnaire and the sampling technique.
A total of 100 (One Hundred) respondents were selected and used as samples for
this study, the respondents were made up of (50 males and 50 females). A total
of four null hypotheses were generated and used in this study using both the
percentage frequency counts and the t-test statistical tools at 0.05 level of
significance. At the end of the data analyses, the following results were
generated: hypothesis one found that there is a significant effect of
educational qualifications and performance of entrepreneurs in small and medium
enterprises in Lagos State Nigeria, hypothesis two showed that there is a
significant gender difference in the management of small and medium scale
enterprises due to educational qualifications of the entrepreneurs in Lagos
State while hypothesis three indicated that the effective management of small
and medium scale enterprises
significantly depend on the educational qualifications of the
entrepreneurs in Lagos State, Nigeria and finally, hypothesis four revealed
that there is a significant gender difference in the successful management of
small and medium scale enterprises in Lagos State, Nigeria.
TABLE OF CONTENTS
TITLE
PAGES
Certification
ii
Dedication
iii
Acknowledgement
iv
Abstract v
Table of contents
vi
CHAPTER ONE:
INTRODUCTION
1.1 Background of
the Study
1
1.2 Statement of
the Problem
9
1.3 Purpose of the
Study
10
1.4 Research
Questions
10
1.5 Research
Hypotheses
11
1.6 Scope and
Delimitation of the Study
11
1.7 Significance of
the Study
12
1.8 Definition of
Terms 13
CHAPTER TWO: LITERATURE REVIEW
2.0
Introduction
15
2.1 Concept
of Education
19
2.2 Concept
of Entrepreneurship
2.3
Conceptual Framework of Entrepreneur and Entrepreneurship 22
2.4
Entrepreneurship: Concepts, Theory and Perspectives 24
2.5 Concept
of Performance
35
2.6
Relationships Among The Various Perspective of Performance 43
2.7
Historical Growth of Small and Medium Scale Enterprise- Nigeria/ 47
Global Scene.
2.8 Problems
Militating Against the Development of Small and 53
Medium Scale Enterprises in Nigeria.
2.9 Benefits
of Small and Medium Scale Enterprises in Nigeria. 55
2.10 Factors
Affecting the Growth of Small Firms in Nigeria. 56
2.11 Small and Medium Scale Enterprises (SMEs) as
a Panacea 63
for Poverty Alleviation in Nigeria.
2.12 Summary
65
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.0
Introduction
67
3.1 Research
Design
67
3.2 Population of
the Study
67
3.3 Sample and
Sampling Technique
68
3.4
Instrumentation
68
3.5 Validity of the
Instruments
69
3.6 Reliability of
the Instrument
69
3.7 Administration of
Instruments
69
3.8 Procedure for
Data Analysis Method
70
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION OF RESULTS
4.0 Introduction
71
4.1 Descriptive
Analysis of Bio-Data.
71
4.2 Descriptive
Analysis of Research Questions. 73
4.3 Testing of
Hypotheses
79
4.4 Summary of
Findings. 83
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
85
5.2 Summary of the Study 85
5.3 Conclusions
86
5.4 Recommendations
87
References
89
Appendix
93
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
In the present day economies of the world, small and medium
scale enterprises have come to be recognized as veritable engines of growth,
employment, poverty reduction and innovative development. Government of various
nations and indeed, world economic development and financial institutions such
as the Brethonwood Institution, International Monetary Fund, the World Bank,
and the United Nations have all in recognition of the potentials of SMEs,
embarked on deliberate developmental policies aimed at creating a productive
base for world economies (Englama, 1997).
The educational
qualification of an entrepreneur who engages in the small and medium scale
enterprises is very paramount for the success of the enterprise. This is
because, if the small and medium scale enterprises are owned and handled by the
educated individuals, the resultant effect will be business boom and success of
the small and medium businesses (Anyanwu, 2004). According to Adeosun (2006),
many businesses in Nigeria, especially the small and medium scale enterprises
do not thrive because their owners are not well educated and in some cases, are
total illiterates who are not well disposed to possess the required educational
ability and skills to handle successful business enterprises such as the small
and medium scale enterprises.
As Onyema (2007), observes that, the academic qualification
or educational level of an individual businessman is important for success in
the business world. According to Onyema, in Nigeria, where unemployment is
high, individual citizens, especially the school leavers/graduates of the
Nigerian tertiary institutions ought to engage themselves in the small and
medium scale enterprises so as to avoid hoping against hope in looking for the
jobs that are non-available. As emphasized by Harper (1995), with the large
increase in world population (especially Nigerian and many developing
countries) “governments can certainly not afford to employ many more. Also
the large scale industry has
dramatically failed to absorb more than a tiny fraction of the multitudes who
need jobs. In many countries, small enterprises are possibly the hope of employment creation, and
it is hardly surprising that policy-makers in developing nations and almost
everywhere else have so eagerly strived to promote and encourage them”. The
availability of efficient infrastructural services is a key requirement for the
take-off of private investment (CBN, 2000).
Reflecting countries experiences in the performance of small
and medium scale enterprises, SMEs employ more than 50 percent of the
industrial workforce in Columbia, India, Indonesia, Kenya, Philippines,
Tanzania and Zambia. They are the real job creators in the European Union (EU)
accounting for 99.9 percent of 11.6 million enterprises (excluding enterprises
in agriculture, fishing and other sectors, 72 per cent employment of the 80.7
million persons employed by all enterprises, and generate 69.7% percent of
turn-over in EU (Deloittee, Touche and Tohmatsu, 1995). SMEs were equally responsible
for more than 50 per cent of total employment in Canada (Government of Ontario,
1995).
Studies have shown that, SMEs have in many countries,
provided the mechanism for stimulating indigenous entrepreneurship, enhancing
greater employment opportunities per unit of capital invested and aiding the
development of local technology (Sule, 1986; World Bank, 1995). They help to
mobilize savings for investment and promote the use of local raw materials.
Through their dispersal nation-wide, they contribute to more equitable income
distribution among individuals and regions, as well as mitigate rural-urban
migration.
In view of these advantages, greater attention has been given
to the promotion of SMEs globally as tool for poverty alleviation and economic
development. Even in the most buoyant economies, such as the United State of
America, small scale enterprises have played an important role in her
transition from the industrial age of the post industrial information
technology era. Also, in other countries like Japan and South Korea, the use of
sophisticated technology has reduced to the minimum efficient scale of
production in industries known for product innovation, such as the electronics
and computer industries (Olorunshola, 2000).
In the same vein, the Nigeria budget for 2003 was designed
among other things to reduce poverty. According to Sanusi (2003), it is “to
pursue macroeconomic policies and sector growth strategy that will achieve
fiscal stability, improve non-oil sector competitiveness, lower levels of
inflation, fix stable and competitive
exchange rate in order to engender growth and reduce poverty through increased
employment”. Specifically, attention has been directed at the development of
small and medium scale enterprises with the aim of turning them into engines of
growth for the various economies.
Various problems confront its growth and hence, the objective
of its establishment and management as engine of growth. These include among
others, lack of information; lack of management and technical skills; poor
ethical values, lack of transparency; lack of proper policy formulation and
implementation; and above all, lack of quality education on the side of the
small and medium scale entrepreneurs in Nigeria.
Many entrepreneurs in
Nigeria have failed in their businesses due to lack of proper education which
gives one the ability to manage and coordinate vital issues that could lead to
success in any undertaken by an individual businessman or woman. Majority of
the business men and women have failed in their small business ventures due to
lack of education which has made them to exhibit poor management and expansion
of their business enterprises. Above all, the small and medium scale industries
failed to achieve the desired economic growth due to poor managerial skills of
the entrepreneurs and their lack of education.
In Nigeria, as in most countries of the world both developed
and developing, small and medium scale enterprises are faced with a number of
problems which seem insurmountable. Often the nature has been that the only
problem which SMEs face is that of inadequate acquisition of educational
qualification and that all other problems are sub-summed under it (Agundu,
2003). In as much as it is acknowledged that the problem of inadequate acquisition
of needed educational qualification by the entrepreneur is a major impediment
to the development of small industries, most especially in the developing
countries like Nigeria, other problems such as poor transportation, inadequate
and inefficient infrastructural facilities and lack of sufficient funds, are
also predominant. Bureaucratic and inefficiency in the administration of
incentives discourage rather than promote SME growth. Multiplicity of
regulatory agencies and taxes has always resulted in high cost of doing
business and poor management practices and low entrepreneurial skill arising
from inadequate educational and technical background of many SMEs promoter.
Weak demand for products, arising from low and dwindling consumer purchasing
power and lack of patronage for locally produced goods by those in authority.
All these problems should be recognized as inhibiting the development of SMEs
(Ausbeth, 2004).
The problem of inadequate and inefficient infrastructural
facilities has been a major handicap to the meaningful development of SMEs in
Nigeria. These problems include lack of regular power supply especially in the
rural areas. Lack of access to good roads, and housing militate against
efficient production and distribution of goods and services (Agabi, 2006). The
problem of inadequate infrastructural facilities particularly in the rural
areas has frustrated the promotion of SMEs in such manner as to providing a
lasting solution to the current problem of spatial imbalance in the
distribution of industries between the rural and urban areas, and to check the
perennial rural-urban drift which increases social tension in urban cities in
Nigeria.
Additionally, there is weak demand for products and service
of SMEs arising from low and dwindling consumer purchasing power. They are
faced with undue competition from already well established firms in the
industry where they belong or choose to enter (Funtula, 2005). All strong
economies in the world today have a very dynamic small and medium scale
industrial sector. This sector has been the backbone in the transformation of
young and developing economies into very complex and advanced economies, which
are characterized by very high productivity and high per capita income. A large
number of today’s big business and even multi-nationals started as family
business in the small and medium scale industrial sector. Through growth and
expansion, their businesses developed in managerial and professional expertise
to become medium or large scale ventures, (Nwankwo, 1981).
The benefits of SMEs are well documented in the literature
and would be summarized here to put into proper perspective the issues
involved. They provide an effective means of stimulating indigenous
entrepreneurship, create greater employment opportunities per unit of capital
invested and aid the development of local technology. Through their wide
dispersal, they provide an effective means of mitigating rural-urban migration
and resources utilization. According to Adeleke (2000), by producing
intermediate products for use in large scale enterprises, they contribute to
the strengthening of industrial inter linkages. Small enterprises are known to
adapt with greater ease under difficult and changing circumstances because
their typically low capital intensity allow products lines and inputs to be
changed at relatively low cost. They also retain a competitive advantage over
large enterprises by serving dispersed local markets and produce various goods
with low scale economies for niche markets (Ndu, 1998).
SMEs also serve as veritable means of mobilization and
utilization of domestic savings as well as increased efficiency through
cost-reduction and greater flexibility. To ensure actualization of their
benefits, programmes of assistance in the area of education, finance,
extension, advisory services, training and provision of infrastructural
facilities were designed by the government for the development of SMEs. Too
many challenges face the small and medium enterprises in Lagos State. Among the
problems are the issues of lack of education among the entrepreneurs who manage
these small and medium scale businesses in the state. It is very disheartening
to note that majority of the entrepreneurs who run their businesses locally, do
not have the requisite educational qualification that will enable them to
manage their enterprises effectively. Little wonder the collapse of many small
and medium scale business enterprises in Nigeria, especially in Lagos State
where most of the businesses are carried out.
Lack of education among the small and medium entrepreneurs,
has caused them to suffer the dearth of business information that are necessary
for the growth and success of their business enterprises. Not only that, due to
the receipt of half or non-education by the owners of the small and medium
scale enterprises, their required managerial skills with which to pilot
effectively the daily routine of the business venture is non-existent.
Therefore, these entrepreneurs continue to manage their businesses on trial-
and- error basis, which often times has resulted in the lost of capital,
stunted growth of the businesses which by extension, has affected the Nigerian
economy adversely and the collapse of the businesses, which equally, has
resulted in the loss of manpower and the resultant unemployment and idleness
which are the causes of restiveness, killings, kidnappings and other vices in
the society these days.
The poor management of businesses by the entrepreneurs, who
are basically uneducated, has brought unhealthiness in the Nigerian economic
growth and development. This is because, the uneducated managers of the
enterprises in Lagos State in particular, have lost focus due to their
ignorance and the ability to coordinate the business ventures effectively and
efficiently for the boosting of the economy in the state. Their failure to
manage well, has led to loss of business opportunities to other up-coming
Nigerians, especially the youths who are now skeptical and confused on the best
business ventures to go into because they have seen the failure of the previous
business attempts by others who were there before them.
1.2 Statement of the Problem
One of the critical
problems facing the economic growth in Africa Sub-Sahara and indeed, developing
countries generally is the problem of harnessing the resources to achieve the
desired goals through the acquisition of educational qualifications by the
entrepreneurs. Other factors identified as major issues facing rapid
development of the small and medium scale enterprises in Nigeria are poor
managerial skills, inadequate infrastructure, internal challenges and some
external forces. The central issue in the study is, does educational
qualifications of entrepreneurs actually affect performance in small and medium
scale enterprises?
1.3 Purpose of the
Study
The purpose of this study is to:
(1) Establish whether educational qualifications
of entrepreneurs affect the performance of small and medium scale enterprises.
(2) Examine whether
the performance of small and medium scale businesses is based on the managerial
skills of the entrepreneurs.
(3) Investigate
whether the effective management of small and medium scale enterprises depends
on the educational qualifications of the entrepreneurs.
(4) Determine
whether there is gender difference in the successful management of small and
medium scale enterprises due to educational qualifications.
1.4 Research
Questions
The following research questions were raised in this study:
(1) Will the
educational qualifications of the entrepreneurs affect the performance of small
and medium scale enterprises in Lagos State?
(2) How can the
managerial skills of entrepreneurs affect the success/performance of small and
medium scale enterprises in Lagos State?
(3) Does the
effective management of small and medium scale enterprises depend on the
educational qualifications of the entrepreneurs?
(4) Will there be
gender difference in the management of small and medium scale enterprises due
to educational qualifications?
1.5 Research
Hypotheses
The following research hypotheses were formulated and tested
in this study:
(1). There will be
no significant effect of educational qualifications and performance of
entrepreneurs in small and medium enterprises in Lagos State.
(2) There will be
no gender difference in the management of small and medium scale enterprises
due to educational qualifications of the entrepreneurs.
(3) The effective
management of small and medium scale enterprises will not significantly depend
on the educational qualifications of the entrepreneurs.
(4) There will be
no significant gender difference in the successful management of small and
medium scale enterprises in Lagos State.
1.6 Scope and
Delimitation of the Study
This study covered the examination of the educational
qualifications and performance of the small and medium scale enterprises in
Lagos State, Nigeria. The small and medium enterprises involved in this study
included the following:
Stonik Enterprises Ltd.
Ejike –Eme Auto Parts.
Emako Auto Enterprises.
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