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Factors constraining the growth and survival of SMEs in Nigeria

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  • John O. Okpara

Abstract

Purpose - The purpose of this paper is to investigate the factors that hinder the growth and survival of small businesses in Nigeria. Design/methodology/approach - A survey method was used to gather data from 211 small business owners and managers located in selected cities in Nigeria. Several statistical analyses were conducted to identify the factors constraining the growth and survival of SMEs in Nigeria. Findings - The results of the study reveal that the most common constraints hindering small business growth and survival in Nigeria are lack of financial support, poor management, corruption, lack of training and experience, poor infrastructure, insufficient profits, and low demand for product and services. Research limitations/implications - The instruments used for this study need to be subjected to more statistical tests in order to establish a more robust validity and reliability. Based on what we have learned, the instruments could be further refined to more closely capture each of the problem areas identified in the literature. Replication of this study using larger samples and a broader geographic base is suggested for cross‐validation purposes. Practical implications - Understanding the factors hindering the growth and survival of SMEs in Nigeria will help policy makers – governments (federal, state, and local), NGOs, and other stakeholders – to design targeted policies and programs that will actively stimulate innovation, as well as helping those policy makers to support, encourage, and promote SMEs for poverty alleviation in Nigeria. For SMEs, this study offers alternative models to counteract the problem of collateral and lending issues. Strategic alternatives on how to address issues such as poor management, poor infrastructure, and corruption are discussed. Originality/value - The significance of this study stems from the fact that very few studies have explored the issue of factors constraining the growth and survival of SMEs for poverty alleviation in Nigeria. The results provide additional insights into operations of SMEs in Nigeria, a sub‐Saharan African country. Sub‐Saharan Africa has been negated and, therefore, has been less researched. Also, the insights gained from this study to contribute the future development of this line of research, particularly in a non‐Western context.

Suggested Citation

  • John O. Okpara, 2011. "Factors constraining the growth and survival of SMEs in Nigeria," Management Research Review, Emerald Group Publishing Limited, vol. 34(2), pages 156-171, January.
    • Handle: RePEc:eme:mrrpps:v:34:y:2011:i:2:p:156-171
    DOI: 10.1108/01409171111102786
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    Citations

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    Cited by:

    1. Mohammed R. Yaseen Zeebaree & Rusinah Bt. Siron, 2017. "The Impact of Entrepreneurial Orientation on Competitive Advantage Moderated by Financing Support in SMEs," International Review of Management and Marketing, Econjournals, vol. 7(1), pages 43-52.
    2. Albert Tchey Agbenyegah, 2019. "A Comparative Study of Rural Entrepreneurial Challenges: Towards Rural Economic Development and a Policy Framework," Journal of Economics and Behavioral Studies, AMH International, vol. 11(3), pages 58-71.
    3. Mohammad Delwar Hussain & Rosni Bakar & Abul Bashar Bhuiyan, 2014. "Entrepreneurship Development and Poverty Alleviation: An Empirical Review," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 4(10), pages 558-573, October.
    4. Bonginkosi Zwane & Celani Nyide, 2017. "SMME attitudes towards Financial Bootstrapping: A perspective from a developing economy," Proceedings of Business and Management Conferences 5607468, International Institute of Social and Economic Sciences.
    5. Karabo Molefe & Natanya Meyer & Jacques de Jongh, 2018. "A Comparative Analysis of the Socio-Economic Challenges Faced by SMMEs: The Case of the Emfuleni and Midvaal Local Municipal Areas," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 7-21.
    6. Juan-Pierré Bruwer & Lindiwe Mabesele & Vincentia Benting & Joël Cloete & Chante Jacobs & Jade Marais & Kgosi-e-tsile Rabolao & Marianne Spangenberg, 2021. "The Theoretical Link Between Cash Flow Statement Usage and Decision Making In South African Small, Medium and Micro Enterprises," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(4), pages 191-204, August.
    7. Johan Karlsson, 2021. "Firm size and growth barriers: a data-driven approach," Small Business Economics, Springer, vol. 57(3), pages 1319-1338, October.
    8. Mamman, Aminu & Bawole, Justice & Agbebi, Motolani & Alhassan, Abdul-Razak, 2019. "SME policy formulation and implementation in Africa: Unpacking assumptions as opportunity for research direction," Journal of Business Research, Elsevier, vol. 97(C), pages 304-315.
    9. Shoaib Ali, 2021. "Aspects Hindering the Development and Survival of Small and Medium-Sized Enterprises in Pakistan: Stability Perspective," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 8(1), pages 10-16.
    10. Van Cong Nguyen & Thi Ngoc Lan Nguyen & Thanh Hang Pham & Song Hoa Vu, 2019. "The Impacts of Selling Expense Structure on Enterprise Growth in Large Enterprises: A Study from Vietnam," JRFM, MDPI, vol. 13(1), pages 1-22, December.
    11. Kayode E. Bowale & Afred O. Ilesanmi, 2014. "Determinants of Factors Influencing Capacity of Small and Medium Enterprises (SMEs) in Employment Creation in Lagos State, Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(2), pages 133-141, April.
    12. Clément Longondjo Etambakonga & Julia Roloff, 2020. "Protecting Environment or People? Pitfalls and Merits of Informal Labour in the Congolese Recycling Industry," Journal of Business Ethics, Springer, vol. 161(4), pages 815-834, February.
    13. Mengdie Ruan & Angathevar Baskaran & Shanshan Zhou, 2022. "Mainland Chinese Immigrant-owned SMEs in Malaysia: Case Studies," Millennial Asia, , vol. 13(1), pages 5-34, April.
    14. Zwane, Bonginkosi Keith & Nyide, Celani John, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    15. Shoaib Ali & Farooq Azam & Hafiz Muhammad Naveed & Waqar Abid, 2020. "Impact of Prestigious Indicators on Sustainable Growth of Small and Medium-Sized Enterprises in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(2), pages 251-257.
    16. Naqeeb Ur Rehman, 2014. "Obstacles to the Growth of Small Software Firms in Islamabad," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 5(2), pages 47-52, May.
    17. Nomsa Sisi Majama & Tebogo Israel ¡®Teddy¡¯ Magang, 2017. "Strategic Planning in Small and Medium Enterprises (SMEs): A Case Study of Botswana SMEs," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 8(1), pages 74-103, February.
    18. ONIFADE Stephen Taiwo & ACET Hakan & ÇEVİK Savaş, 2022. "Modeling The Impacts Of Msmes' Contributions To Gdp And Their Constraints On Unemployment: The Case Of African’S Most Populous Country," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(1), pages 154-170, April.
    19. Thea Visser & Gideon Nieman & Emsi van Heerden, 2015. "Financial Administration and Small and Medium Enterprises:A Study Conducted in South Africa," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 1(3), pages 181-192, July.
    20. Bonginkosi Keith Zwane, & Celani John Nyide, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 347-356, July.
    21. Daniel E. Ufua & Olusola J. Olujobi & Mercy E. Ogbari & Joseph A. Dada & Oluwatosin D. Edafe, 2020. "Operations of small and medium enterprises and the legal system in Nigeria," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-7, December.
    22. Baiju Pallayil & Sunil Kumar Ambrammal, 2022. "Size and performance of Indian manufacturing firms: new evidence from dynamic panel system GMM approach," SN Business & Economics, Springer, vol. 2(12), pages 1-22, December.
    23. Ajay K Garg & Phillip NT Phaahla, 2018. "Factors Affecting the Business Performance of Small Businesses in Sekhukhune," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 54-67.
    24. OMISORE, Segun & Ho, Manh-Toan, 2019. "Corporate Entrepreneurship, Strategy Formulation, and the Performance of the Nigerian Manufacturing Sector," Thesis Commons u39nc, Center for Open Science.
    25. Zakia Jabeen & Jabir Ali & Nadia Yusuf, 2021. "Difference in business obstacles faced by firms across sizes: evidence from enterprise survey data of India," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 11(1), pages 71-81, December.

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