ABSTRACT
The role of indigenous
entrepreneur in the technological and industrial development of any nation
justifies the need for greater attention of this sector, the foundation of
growth in developed countries of the world is usually attributed to the
contribution of these indigenous entrepreneurs.
This study focused on
these factors influencing the behaviour and performance of indigenous
entrepreneur in Lagos State with a case study of Oshodi/Isolo Industrial
Estate. A survey of indigenous entrepreneur was carried out through
self-administered questionnaires which revealed that certain factors are
important for the success of the indigenous entrepreneur which were considered
under the personality and environmental factors in this study.
However, the
Statistical Package for Social Sciences (SPSS) was adopted for the analysis of
the data gathered. Owing to this analysis, it was revealed that technological
factors affects the performance of indigenous entrepreneur in terms of profit.
The study also reveals that work-experience as personality factors have a far
reaching effect on the rate of turnover of indigenous entrepreneur.
The study recommends
that indigenous entrepreneurs should adopt modern technologically developed
machines for production of goods to records a laudable success.
TABLE OF CONTENT
Pages
Title Pages i
Dedication ii
Certification iii
Acknowledgement iv
Abstract v
CHAPTER
ONE: INTRODUCTION
1.1
. Background of the Study 1
1.2
Statement of the Problem 8
1.3
Aim and Objectives of the Study 9
1.4
Research Questions 10
1.5
Research Hypotheses 10
1.6
Significance of the Study 11
1.7
Scope of the Study 12
1.8
Limitation of the Study 12
1.9
Operational Definition of Terms 12
References 16
CHAPTER
TWO: LITERATURE REVIEW
2.1 Introduction 18
2.2 Potency of Small and Medium Scale
Enterprises 26
2.3
Factors Militating Against SMEs Operations 29
2.4
Behaviour of Indigenous Entrepreneur and 31
Business Success
2.5
Performance of Indigenous Entrepreneur 35
and Business Success
References
CHAPTER
THREE: RESEARCH METHODOLOGY
3.0 Introduction 47
3.1 Research Design 48
3.1.1 Types of Research Methods 48
3.1.2 Study Variables and Their
Operationalisation 49
3.3 Restatement of Research Questions 51
3.3.1 Restatement of Research Hypotheses 52
3.4 Population of the Study. 53
3.5 Samples and Sampling Techniques 53
3.6 Data Collection Instrument 54
3.7 Research Instrument and Instrumentation 54
3.8 Administration of the Instrument 55
3.9 Analytical Tools 55
3.10 Validation of Instrument 55
3.11 Reliability of the Instrument 56
References 57
CHAPTER
FOUR: DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
OF RESULTS
4.
1 Introduction 58
4.2
Operational (Key) Variables 61
4.3
Analysis of Individual Questions in the 63
Questionnaire
4.4
Analysis of Test of Hypotheses 76
4.5
Discussion on Findings 81
References 82
CHAPTER
FIVE: SUMMARY, RECOMMENDATIONS AND
CONCLUSION
5.1 Summary 83
5.2 Findings 84
5.3 Recommendations 85
5.4 Conclusion 86
Bibliography 88
Appendix 93
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
One of the fundamental
objectives of a responsible government is to ensure optimum standard of living.
The post independence government adopted import substitution; large-scale
industries by investing on large
capital project which is predicated on the notion that "big is
better" while "small is bad". Small and medium enterprises were
considered as outmoded and synonymous with technological backwardness. (Nnanna
2001). Even the Structural Adjustment Programme (SAP) introduced to restructure
and diversify the production and consumption pattern of the Nigerian economy
created painful effects on small and medium enterprises and forced many operators
in this sector to fold up their operation (Oni 2002).
After many years of
neglect, most developing countries have appreciated the linkage between technological
and the role of indigenous entrepreneurs (i.e. small business enterprises). In
Nigeria, assistance from national and international institutions are rendered
for promotion of this subsector. Despite the substantial assistance of these
institutions and the various restructuring programmes adopted by the successive
Nigerian Governments, little progress has been made in improving the standard
of living, a lot of Nigerian are yet to leave poverty, the Nigeria's per capita
income had been growing at 20.% annually hence it would take 35 years for the
capita income to double from US$400 dollar to USD800 dollars (Lawal 2003). The
decision of the federal government to withdraw from International Monetary Fund
(IMF) in the interest of democracy, accountability and good. governance has created the need
for the government to look inward and exploit the opportunities offered by
these indigenous entrepreneurs through various programme initiated and
supported by them.
Meanwhile studies on
micro, small and medium scale enterprises have shown that entrepreneurs in these
categories of business is a viable means of promoting self-reliance economic
development as well as in accelerating the pace of industrial technology
(Anyanwu 2000; Obitayo 2001; Lawai and Kio., 2001).
The 1988 census of
Business conducted by the Federal Office of
Statistics (FOS), revealed that 70%4 of the 220,000 industrial
establishments surveyed were small and medium enterprises and accounted for 70% of industrial employment as well as 10-15% of the
manufacturing input.
Fadahunsi (1992) stated that SMEs represent 900fo of the enterprises in the ACP
(African, Caribbean and Pacific) countries. They also provide 70%z of employment opportunities for the
citizens and promote indigenous technology. Also, Kurattko and Hodgetts (200 I)
noted that small business employ 530/0 of the private workforce and accounted for 47% of sales and 51% of private sector gross domestic product
(GDP). All these therefore show the predominance of SMEs in the economy of both
developed and developing countries. These leads to the question, what classes
of business are to be referred to as SMEs?
In the context of this
study, indigenous entrepreneurs have been referred to as SMEs. Small scale
could therefore be referred to as cottage industry. And they can be best described based on some of
their characteristics:
·
Few numbers of employees
·
Ho amount of investment and
annual business turnovers
·
Small in size within the
industry
·
Managers are also owners,
etc (Ogundele 2007).
The 3rd Nigerian
National Development Plan (1975-1980) defined small scale industry as a manufacturing
establishment that employs less than 10 people and whose investment on
machinery and equipment do not exceed N600,OOO (six hundred thousand naira).
From another perspective, the Central Bank of Nigeria in 1995, in its credit
guidelines defined Small Business Enterprises as any business organization with
an annual turnover of less than NSOO,OOO (Five hundred thousand naira).
Ogundele (2000) defined
Small Scale Enterprises as organizations employing a minimum or rive employees
and with a minimum initial capital outlay of not less than N5000 five thousand
naira) when such organizations were established between 1972 and 1986. Osuagwu
(200 I} noted that an additional requirement to be tagged Small Scale
Enterprises in Nigeria is that the number of employee is not greater than 50 in any situation and the financial
capital outlay is not more than N50, 00 (one hundred and fifty thousand naira).
From the foregoing
definitions, it could be seen that different individuals, institutions, or
bodies and countries have given definitions to small scale enterprises.
Therefore, as with entrepreneurship, it is difficult to have a generally
acceptable definition of small scale enterprises, the best one can say is that
small scale enterprises may be viewed as a business unit which is independently owned and
managed and which does not dominate its relevant market segment of interest.
In Nigeria, the recent
economic submit recommended the creation of 500,000 entrepreneurs on the assumption that if each entrepreneur
employs 100 workers, a tot83 number of 50 million jobs be created with the time
frame.
Although, all these
developments as commendable, however, the best way to eradiate poverty is not
to throw money at if but to grow out of it.
The various efforts of the government (with focus of Lagos) on the
development of small and medium scale enterprises through various assist8J1ce
in highly initiative and well structured programmes to encourage vocational
educational centre in the state.) with an interest of setting up those
apportioned individuals as independent entrepreneur after successful completion
of course proved abortive, the rate of survival of these newly set up
enterprises a.re still very low which makes the effort of the Lagos State
government to result in futility and also making individuals to still became
job seekers as against the normal goal of being an employer of labour and
definitely still giving chance to poverty.
Considering - this
pathetic situation, for the governments effort on entrepreneurship development
to be fruitful in Lagos State, these factors influencing the behaviour and
performance of these indigenous entrepreneurs should be properly examined for
success to be achieved.
However, in the context
of this study the factors are to be considered on two broad basis, personality
factors; effect of age, work experience and level of education will be
considered and under environmental factors which these indigenous entrepreneurs
cannot manipulate i.e economic, technological and social-cultural effects will be
considered. (Ogundele 2003)
PERSONALITY FACTORS
The personality factors examine those embodied
factors and characteristics with an individual' possess that gives
predisposition of
indigenous entrepreneurs
ranges from his ability to be innovative, intelligent, highly perseverance,
internal locus of control, tolerance for ambiguity, leadership sand dynamism,
working experience, good educational background and the rest of others.
However, in the context
of this study we shall focus on three of these personality factors which are
mostly of importance and crossly examine how they affect performance and
behaviour.
(1)
LEVEL OF EDUCATION
Education exposes
individuals to various acceptable societal conduct, so that of widens the
thinking horizons of entrepreneurs in terms of foresight for opportunities and
how to organize resources to exploit such opportunities. Over the years the
level of education has not been considered significant as key-success factor
that can affect both behaviour and performance. For instance, the recorded
success of Igbo business men in Spare-Parts ozver the years have been quite
commendable.
However, with the level
of complexity and dynamic nature of the Lagos business environment, educational exposure is
not only necessary but of great value and importance to nature a
business enterprise from growth to survival.
(2)
EFFECT OF AGE
Certain age level as been identified by some
scholars as a determinant of key success factor the age of the entrepreneurs
should suit both features of vibrancy (i.e. ability to be agile and fast) and
knowledgability (i.e. ability to take wise decisions). This helps the effort of
the whole enterprises to be easily coordinated and channeled towards overall
objectives age will definitely affect both behaviour and performance. For
instance, in terms of behaviour, people who are advanced in age have been
considered to possess a good leadership skill using their experience of life to
properly coordinate effort of others.
(3)
WORK-EXPERIENCES
A possession of good work-experiences is also a
determinant of success of the entrepreneur. This helps him to be aware of the
challenges and loop holes that might affect the enterprises'. Also, certain
business are affected by seasonal conditions, such experience will also go a
long way to help in understanding the effect of such seasonal variations and
conditions on the particular business.
Also, the effect of these factors on the level
of performance cannot be overstated especially when technicalities are involve
in the production
Under the environmental factors, the following
forces will be considered, economic, technological and social-cultural factors.
However, it is pertinent to know that indigenous entrepreneurs
cannot control this environmental factors but work under certain confine to
enjoy the effect of these environmental factors which can also be turned into
exploitable opportunities.
1. ECONOMIC FACTORS
The economic factors relates to the exact
exchange rate, the tax system adopted, the inflation rate, the Gross Domestic
Output, etc and how they affect the functioning of the enterprise. These
economic forces should be properly taken cognizance of because there effect on
performance could be adverse (i.e. becoming a threat) for instance, the steady
fall in demand associated with unfavourable income level, the multiple tax
system, are paramount economic factors to be considered if success is to be
recoded by the indigenous entrepreneurs.
2. TECHNOLOGICAL
FACTORS
The technological environment also affects
indigenous entrepreneurs in terms of performance. The globally accepted various
online mode of business transaction through the use of internet have also
affected the performance of indigenous entrepreneurs. All these technological
methods of transacting business require the indigenous entrepreneurs to take
cognizance of latest innovative method of production if successes have to be
recorded.
3. SOCIAL
– CULTURAL FACTORS
Socio-psychological factors are closely
related to socio-psychological forces in theirs influence on behaviour. The
social-cultural factors examine the way of life, belief, customs and
traditions, philosophical values that affect business enterprises within the
Lagos metropolis. Over the years, these factors have been attributable to the
success or failure of indigenous entrepreneurs and also there effect on
behaviour have been paramount for consideration.
From the foregoing it can be seen that certain
factors affects both performance and behaviour while some affect only
behaviours and others also affects only performance.
The main purpose of this paper therefore is to
determine the relative importance of indigenous entrepreneurs (i.e small scale
enterprises) in Lagos State and those factors influencing g their behaviour and
performance and how these factors can be incorporated to improve the
performance and behaviour of these indigenous entrepreneurs (i.e. small-scale enterprises) in
Lagos State.
1.2 STATEMENT OF PROBLEM
Despite programs put forward by the government
to assist entrepreneurship development in Lagos State through the National
Directorate of Employment (NDE Lagos Chapter) Vocational and Acquisition
Centre, etc the success is still minimal compared to what is expected as a
result of some personal and environmental factors that affects the performance
and behaviour of indigenous entrepreneurs.
For the success of these indigenous~
entrepreneurs, the study has decided to properly investigate the environmental
variable (i.e. economic, technological and social-cultural factors) and
personality variable (i.e age, work experience
and level of education) and also their effects on success of entrepreneurship
development.
1.3 AIM AND OBJECTIVES OF THE STUDY
The present study is designed to investigate
several factors that affect the performance and behavoiour of indigenous
entrepreneurs (i.e small scale enterprises) in Lagos State. However, the
factors have basically been grouped into environmental and personality factors.
Under the environmental factors, the content of economic, technological and social cultural factors win be examine and
also under the personality factors, the content of age, level of education, and
work experience will be examined, thus removing the problem of narrowness of
scope of determinants that are to be covered.
However, the supporting objectives that would
aid the achievement of the above are listed below;
i.
To
examine those critical success factors required to enhance the development of
indigenous entrepreneurs in Lagos State.
ii.
To
ascertain if the some factors are responsible for improvement in both
performance and behaviour of indigenous entrepreneurs.
iii.
To determine
those specific environmental factors that influence behaviour and performance
of indigenous entrepreneurs (Le. small-scale enterprises) in Lagos State.
iv.
To
ascertain if certain personality factors can influence both performance and
behaviour of indigenous entrepreneurs.
v.
To
examine if various assistance on the path of Lagos State government to improve indigenous entrepreneurs
performance has been fruitful.
1.4
RESEARCH QUESTIONS
At the completion of this study, the following
research questions must have been answered:
a.
Does
environmental and personality factors responsible for improvement in profit of
indigenous entrepreneurs?
b.
To what extent does technological factor
influence the sales and turnover of the indigenous entrepreneurs in Lagos
State?
c.
To what extent does work experience as a
personality factors affect behaviour of indigenous entrepreneurs?
d.
Why has various assistance of the path of
Lagos State government improved small scale enterprises performance been
abortive?
e.
How can social-cultural factors be
incorporated to improve the turnover of indigenous entrepreneurs in Lagos
State?
f.
To what extent does an economic factor affect
the success of indigenous entrepreneurs?
1.5
RESEARCH QUESTIONS
The following are the null and alternative
hypotheses;
Ho: There is no
significant relationship between technological factor and performance of
indigenous entrepreneurs in Lagos State
HI: There is significant relationship between
technological factor and performance of indigenous entrepreneurs in Lagos State
Ho: There is no
significant relationship between level of education and behaviour of indigenous
entrepreneurs in Lagos State
HI: There
is significant relationship between level of education and behaviour
of indigenous entrepreneurs in Lagos State
1.6
SIGNIFICANCE OF THE STUDY
In light of the role of indigenous
entrepreneurs towards economic development of a country in terms of creation of
gainful employment opportunities, increase in Gross Domestic Product (GDP),
improvement in the level of per capital
income and standard of living, provision of material inputs for
large industries, reduction of regional economic balance, enhancement of
self-sufficiency, alleviation of poverty, etc. It definitely becomes of
paramount importance to promote the growth and survival of indigenous
entrepreneurs. Also, considering the pace of economic development of developed
countries, it becomes necessary that if Nigeria as a country also has to be
economically and socially sound, small scale enterprises have to be given
adequate attention.
Despite the effort
of government to promote indigenous entrepreneurs in order to reap the benefits
associated through various initiated and well structured programs, success is
still very minimal as compared with the expected performance. Atimes, some indigenous
entrepreneurs who started these enterprises cannot see it though as a going
concern due to certain personality and environmental factors.
However, this study have decided to consider
those key success factors that affect behaviour and performance of indigenous
entrepreneurs and how they (Le. the factors) can be incorporated to improve the
survival of
small scale business.
This study will therefore focus on how to
sustain indigenous entrepreneurs from growth to survival so that Nigeria can
have a share of the global economic development taking place all around the
world.
1.7
SCOPE OF THE STUDY
The study will be focused on those factors
that affect the behaviour and performance of indigenous entrepreneurs
specifically within Lagos State basically under personality and environmental
factors.
Under personality factors, the following
effect will be considered, age, work experience and level of education. Also
under the environmental factors, the importance effects of economic,
technological and social cultural factors will also be considered on both
performance and behaviour in order 0 remove narrowness of scope of the determinants that are to be covered.
1.8
LIMITATION OF THE STUDY
The study affects indigenous entrepreneurship
development specifically in Lagos State. And also the effects of various
governmental assistance program will slightly be examined in the context of this study.
1.9
OPERATIONAL DEFINITION OF TERMS
The following terms will be explained within
the context of this paper, they are as follows;
Behvaiour according to the business dictionary
can be defined as response of an individual or group to an action,
environmental, person or stimulus. It can also
be defined as the aggregate of the responses or reactions or movements made by
an organism in any situation.
Therefore, in the
context of this paper certain factors will be considered that affects how
indigenous entrepreneurs respond to actions, environmental, persons and
stimulus and how this response affects the general success of the business.
Performance
According to the
business dictionary, performance generally implies accomplishments in a given
tasks, measured against present standards of accuracy, completeness cost and
speed.
Performance of
indigenous entrepreneurs can be measured using yardstick such as sales, profit,
turnover etc to evaluate the level of success achieved. This can be composed
with the present standard.
Entrepreneur
An entrepreneur is regarded
as the individual who perceives opportunities and take actions to obtain
required resources for the provision of new and improved goods and services
(Timmous, 1994 and Smilor, .1997}.
Drucker (1985) also defines the entrepreneur
as the innovative individual who perceives business opportunities and organize
the required resources to initiate a successful business activity for profit.
Kuratko and Hodegetts (2001) also dermed an
entrepreneur as a person that perceives opportunities where others perceive
chaos and confusion.
The characteristics of an entrepreneur include
innovativeness, intelligence, internal locus of control, highly perseverance,
dynamism, etc.
Entrepreneurship
As in the case of the origin of entrepreneur,
the beginning of the evolutionary process of the concept
«entrepreneurship" can be traced back to Centillion (1755), Say (1821) and
Schumpeter (1934) who all wrote about entrepreneurship and its impact on
economic development. Since those periods, writers have continued to attempt to
describe or define what entrepreneurships stand for more particularly since the
1950s (Ogundele 2007).
Entrepreneurship can therefore be defined as a
process that involves recognizing opportunities in the environment, mobilizing
resources to take advantage of such opportunities, in providing improved goods
and services to the ultimate consumers and making profit as a reward of risk.
Entrepreneurship can also be defined as the non-continuous process of combining
resources of time, man, money and material to create new goods, services and
ideas. (Osuagwu 2001)
SMALL-SCALE BUSINESS
Business may be defined as the organized
effort by individuals or companies to produce goods, services, or idea to
exchange these goods, services and ideas with the relevant market of interest
and to get some rewards for this organized effort (Silver; 1978)
In recent times, attention has been directed
towards the contribution and role of Small Business Enterprises (SBE) within
the world economy due to their contribution to economic development e.g
employment creation, development of local technology, mobilization of
savings etc.
Therefore, a small-scale enterprise may be
seen as a business which is independently owned and managed and which does not
dominate its relevant market segment of interest. (Giriffin and Ebert, 1996).
Indigenous entrepreneurs are individuals that
exploit business opportunities in their local environment. They gather
resources to exploit such perceived local opportunities thereby generating
funds and creating employment opportunities. This indigenous entrepreneur can
be related or said to be synonymous with small scale business owners
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