Entrepreneurial Capital and Perceived Performance of Small and Medium Scale Enterprises (Smes) in Kano State, Nigeria

ABSTRACT 

Many SMEs are winding up, only few SMEs owners have been able to sustain wealth past one generation, many of the ventures have failed rather than change ownership. Most SMEs die in their infancy with very few like 5% survive and grow to maturity. The main objective of this research study was to examine the relationship between entrepreneurial capital and the perceived performance of SMEs in Kano State, Nigeria. This Dissertation specifically investigated the relationships between entrepreneurial education; entrepreneurial business skills; entrepreneurial risk taking and entrepreneurial personal networks of owners, managers and staff of SMEs in Kano state, Nigeria. The present study employed a cross sectional research and descriptive research design in which data was collected with mixed strategies qualitative and quantitative approaches. The sample size of 396 were selected from a target population of 25,848 owners, managers and other staff using Sloven’s formula. Results using Pearson linear regression analysis did not support three null hypotheses that there were no significant relationship between entrepreneurial capital variables (entrepreneurial education; entrepreneurial business skills and entrepreneurial personal networks) and the perceived performance of SMEs. Specifically, there were positive and strong relationship between the three independent variables and SMEs perceived performance. Entrepreneurial education (t – statistic = 4.605) was significant at P< 0.001; entrepreneurial business skills (t – statistics = 13.596) was significant at P< 0.001 and entrepreneurial personal networks (t - statistic = 6.082) was significant at P< 0.001. Entrepreneurial risk taking exerted insignificance relationship on SMEs perceived performance with t – statistic = 1.853 at sig 0.065. Findings from interview analysis on all the constructs confirmed and cross-validated the study variables. In conclusion the present study has added value to the growing body of knowledge in the field of entrepreneurial development activities. The study recommends that entrepreneurial capital variables should be encouraged (by inspiring deserved workers to attend workshops, conferences and leadership training for owners and managers; ensuring that operators participate vigorously in networking such as participation in leadership of their local chamber of commerce; local lead exchange group to share their product/services; sharing e-newsletters to their existing customers /getting contacts from customers, staff and friends); enriched by acquiring more refresher courses related to the necessary skills in order to update the operators’ abilities to be more current and maintained by ensuring that sure trainings are done frequently in order to continue to influence their performance so as to remain in business as the findings showed positive relationships. Theoretically, the study provided implication by giving additional empirical evidence on the domain of human capital and resource based review theories instead of focusing on other existing theories that explain the precursors of SMEs perceived performance. In practice, the study serves as reference to anyone who is interested in establishing his personal business which provide insight into these entrepreneurial capital variables, and also for any organization that is interested in achieving profitability or continue sustaining effective and profitable business venture.

TABLE OF CONTENT

Tittle Page

Tittle page ……………………………………………………………………………... i

DECLARATION……………………………………………………………………..... ii

APPROVAL……………………………………………………………………............ iii

ACKNOWLEDGEMENT……………………………………………………………... iv

TABLE OF CONTENT……………………………………………………………….. vi

LIST OF TABLES……………………………………………………………………. xi

LIST OF FIGURES…………………………………………………………………… xiii

ABSTRACT…………………………………………………………………………… xiv

CHAPTER 0NE INTRODUCTION………………………………………………… 1

1.0 Introduction…………………………………………………………. 1

1.1 Background to the Study……………………………………………. 1

1.1.1 Historical perspective……………………………………………….. 1

1.1.2 Theoretical perspective……………………………………………... 5

1.1.3 Conceptual perspective……………………………………………... 10

1.1.4 Contextual perspective……………………………………………… 13

1.2 Statement of the Problem…………………………………………… 15

1.3 Purpose of the Study………………………………………………... 16

1.4 Specific Objectives…………………………………………………. 17

1.5 Research Questions…………………………………………………. 17

1.6 Hypotheses………………………………………………………….. 17

1.7 Scope of the study…………………………………………………... 18

1.7.1 Geographical scope…………………………………………………. 18

1.7.2 Content scope……………………………………………………….. 19

1.7.3 Theoretical scope…………………………………………………… 19

1.7.4 Time scope………………………………………………………….. 20

1.8 Significance of the Study…………………………………………… 20

1.9 Organization of the study…………………………………………… 21

CHAPTER TWO LITERATURE REVIEW……………………………………….. 23

2.0 Introduction…………………………………………………………. 23

2.1 Theoretical review ……………………………………………….... 23

2.2 Conceptual review…………………………………………………... 30

2.2.1 Entrepreneurial capital……………………………………………… 30

2.2.1.1 Entrepreneurial education…………………………………………... 35

2.2.1.2 Entrepreneurial business skills……………………………………… 37

2.2.1.3 Entrepreneurial risk taking………………………………………….. 39

2.2.1.4 Entrepreneurial personal networks………………………………….. 42

2.2.2 SMEs and its perceived Performance measures……………………. 46

2.2.2.1 Sales growth………………………………………………………… 50

2.2.2.2 Innovation…………………………………………………………... 51

2.2.2.3 Firm’s year of survival …………………………………………….. 52

2.2.2.4 Personal satisfaction ……………………………………………….. 53

2.2.2.5 Profit ……………………………………………………………….. 53

2.3 Empirical Review ………………………………………………….. 54

2.3.1 Entrepreneurial Capital and perceived Performance of SMEs…….. 54

2.3.2 Entrepreneurial education and perceived Performance of SMEs….. 62

2.3.3 Entrepreneurial business skills and perceived Performance of SMEs 66

2.3.4 Entrepreneurial risk taking and perceived Performance of SMEs….. 70

2.3.5 Entrepreneurial personal networks and perceived Performance of SMEs………………………………………………………………. 72

CHAPTER THREE METHODOLOGY…………………………………………… 75

3.0 Introduction…………………………………………………………. 75

3.1 Philosophical Approach…………………………………………….. 75

3.2 Research design…………………………………………………….. 77

3.3 Target Population…………………………………………………… 77

3.4 Sample size…………………………………………………………. 78

3.5 Sampling procedures………………………………………………... 79

3.6 Data Collection Instruments………………………………………... 80

3.7 Validity and reliability of instrument……………………………….. 81

3.7.1 Validity of instrument………………………………………………. 82

3.7.1.1 Face validity………………………………………………………… 82

3.7.1.2 Content validity…………………………………………………….. 82

3.7.1.3 Construct validity…………………………………………………… 83

3.7.2 Reliability of instrument …………………………………………… 84

3.7.2.1 Pilot testing…………………………………………………………. 85

3.7.2.2 Cronbach’s Alpha (α) Test………………………………………….. 86

3.8 Data Collection procedures…………………………………………. 87

3.9 Data Analysis Procedure……………………………………………. 88

3.9.1 Quantitative data procedure ……………………………………….. 88

3.9.2 Qualitative data procedure ………………………………………… 90

3.0 Ethical consideration……………………………………………….. 90

CHAPTER FOUR PRESENTATION, ANALYSES AND INTERPRETATION

OF RESULTS………………………………………………………………………… 91

4.0 Introduction…………………………………………………………. 91

4.1 Response Rate………………………………………………………. 91

4.2 Data Screening and Diagnostic Tests……………………………….. 92

4.2.1 Assessment of common method variance……………………........... 92

4.2.2 Assessment of Missing values ………………………………........... 94

4.2.3 Outliers Detection and Handling…..……………………………….. 96

4.2.4 Normality Test ……………………………………………………... 97

4.2.5 Linearity Test ……………………………………………………… 100

4.2.6 Test for Sampling Adequacy KMO and Bartlett's test of sphericity.. 100

4.2.7 Multicollinearity test ………………………………………………. 102

4.3 Demographics characteristics of respondents………………………. 103

4.4 Results on the dependent Variable: SMEs perceived performance… 108

4.4.1 Confirmatory factor analysis CFA)………………………………… 112

4.5 Description of Entrepreneurial capital variables ………………….. 114

4.5.1 Description of Entrepreneurial education…………………............... 114

4.5.1.1 Correlation matrix…………………………………………………. 117

4.5.2 Description of Entrepreneurial business Skills……………………. 119

4.5.3 Description of entrepreneurial risk taking…………………………. 125

4.5.4 Description of entrepreneurial personal networks………………….. 130

4.6 Findings as per the study objectives………………………………... 135

4.6.1 Pearson’s linear correlation on Entrepreneurial capital and Perceived Performance of SMEs in Kano state Nigeria……………. 135

4.6.1.1 Relationship between entrepreneurial education and perceived performance of SMEs in Kano State, Nigeria……………………… 136

4.6.1.2 Relationship between entrepreneurial business skills and perceived performance of SMEs in Kano State, Nigeria………………………. 136

4.6.1.3 Relationship between entrepreneurial risk taking and perceived performance of SMEs in Kano State, Nigeria………………………. 137

4.6.1.4 Relationship between entrepreneurial personal networks and perceived performance of SMEs in Kano State, Nigeria…………… 137

4.6.2 Pearson’s linear regression on Entrepreneurial Capital and Perceived Performance of SMEs in Kano state, Nigeria…………… 137

4.6.2.1 Model fit Assessment -Durbin Watson statistic…………………….. 138

4.6.3 Testing the null hypotheses and interpretation of results…………… 138

4.6.3.1 Results on hypothesis One…………………………………………. 140

4.6.3.2 Results on hypothesis two…………………………………………... 140

4.6.3.3 Results on hypothesis three………………………………………… 141

4.6.3.4 Results on hypothesis four………………………………………….. 141

CHAPTER FIVE DISCUSSION, CONCLUSION AND RECOMMENDATION 144

5.0 Introduction ………………………………………………………… 144

5.1 Summary of the study’s findings…………………………………… 144

5.2 Discussion ………………………………………………………….. 145

5.2.1 What is the relationship between entrepreneurial education and the perceived performance of SMEs in Kano State, Nigeria? ................. 145

5.2.2 What is the relationship between entrepreneurial business skills and the perceived performance of the SMEs in Kano State, Nigeria? .......

5.2.3 What is the relationship between entrepreneurial risk taking and the perceived performance of SMEs in Kano State, Nigeria? ................. 149

5.2.4 What is the relationship between entrepreneurial personal networks and the perceived Performance of SMEs in Kano State, Nigeria? .... 150

5.3 Conclusions…………………………………………………………. 152

5.4 Implications from the study………………………………………… 153

5.4.1 Theoretical Implications………………………………………. 153

5.4.2 Practical Implications……………………………………………….. 154

5.4.3 Methodological Implication………………………………………… 155

5.5 Recommendation from the study…………………………………… 155

5.6 Contribution to knowledge…………………………………………. 157

5.7 Limitations and Future Research Directions……………………….. 158

REFERENCES………………………………………………………………………. 161

Appendix 1 SAMPLE SIZE DETERMINATION………………………………. 194

Appendix 2 MEAN RANGE DETERMINATION……………………………… 196

Appendix 3 TRANSMITTER LETTER………………………………………… 197

Appendix 4 INTRODUCTION LETTER……………………………………….. 198

Appendix 5 INFORMED CONSENT…………………………………………… 199

Appendix 6 RESEARCH INSTRUMENT: QUESTIONNAIRE……………….. 200

Appendix 7 INTERVIEW GUIDE TO OWNERS/MANAGERS………………. 204

Appendix 8 SPSS OUTPUT……………………………………………………... 205