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 vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 9
of the Study 10
1.4 Research Questions 10
1.5 Research Hypotheses 11
and Delimitation of the Study 11
1.7 Significance of the Study 12
of Terms 13
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 15
Framework of Entrepreneur and Entrepreneurship 22
Concepts, Theory and Perspectives 24
Among The Various Perspective of Performance 43
Historical Growth of Small and
Medium Scale Enterprise- Nigeria/ 47
Problems Militating Against the
Development of Small and 53
Scale Enterprises in Nigeria.
Small and Medium Scale Enterprises in Nigeria. 55
Affecting the Growth of Small Firms in Nigeria. 56
Small and Medium Scale Enterprises
(SMEs) as a Panacea 63
Poverty Alleviation in Nigeria.
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
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
5.1 Introduction 85
5.2 Summary of the
5.3 Conclusions 86
5.4 Recommendations 87
1.1 Background of the
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).
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.
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,
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
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:
whether educational qualifications of entrepreneurs affect the performance of
small and medium scale enterprises.
whether the performance of small and medium scale businesses is based on the
managerial skills of the entrepreneurs.
whether the effective management of small and medium scale enterprises depends
on the educational qualifications of the entrepreneurs.
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:
the educational qualifications of the entrepreneurs affect the performance of
small and medium scale enterprises in Lagos State?
can the managerial skills of entrepreneurs affect the success/performance of
small and medium scale enterprises in Lagos State?
the effective management of small and medium scale enterprises depend on the
educational qualifications of the entrepreneurs?
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:
will be no significant effect of educational qualifications and performance of
entrepreneurs in small and medium enterprises in Lagos State.
will be no gender difference in the management of small and medium scale
enterprises due to educational qualifications of the entrepreneurs.
effective management of small and medium scale enterprises will not
significantly depend on the educational qualifications of the entrepreneurs.
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.
All the above small and medium scale
enterprises are located in the Mainland Local Government Area of Lagos State,
1.7 Significance of the Study
The study may be
beneficial in the following dimensions:
Adult education facilitators may benefit from
the findings and recommendations of this study, because, it may afford them the
opportunity to learn deeply, the effect of education on successful management
of small and medium scale enterprises in Nigeria in general and Lagos State in
The adult education students may be able to
learn more on what connotes small and medium scale enterprises and how the
level of education of an individual affects his handling or management of the
The school authorities may be in-the-know
concerning the kind of education they would give to an individual in order to
equip him/her to be able to manage effectively the small and medium enterprises
With the findings and recommendations of the
study, governments of the Federal, States and Local Governments may be able to
know that establishment of small and medium scale enterprises is important to
curb the issue of unemployment and over-dependence on government for
The members of the society may be able to
understand the importance of effective management of small and medium scale
enterprises in Nigeria as an engine for effective development in the country,
especially in the aspect of the economy.
1.8 Definition of Terms
Small - Scale Industry: An industry with a labour size of 11-100 workers or
a total cost of not more than N50 million, including working capital but,
excluding cost of land.
Medium Scale Industry: An industry with a labour size of between 101-300
worker’s or a total cost of over N50million, but not more than N200million,
including working capital, but, excluding cost of land.
Qualification: This means the
academic qualification of an individual, especially the entrepreneurs of the
small and medium scale enterprises.
Performance: This refers to the level of activity put in by an
individual either in his/her work or any other activities be it in education,