Abstract
The chapter established the effects of Nigerian market environment on SMEs performance. An empirical study was conducted with survey research design of 21,444 firms and a sample size of 1,102 was arrived at scientifically. Probability sampling methods were employed. An adapted validated questionnaire, and a 0.82-0.96 reliability coefficients range was used. Inferential statistics were used to analyse the data using SPSS software version 22.0. The findings reveal that Nigerian market environment had significant negative effects on the SME performance. The different components of the Nigerian market environment have different effects on the SME performance. The results imply that the environmental turbulence could be responsible for the high failure rate of SMEs in Nigeria. The study contributes to the body of knowledge on environmental and performance management by noting the criticality of the industry market environment in facilitating organizational performance.
Top2. Background
The study of the drivers of performance is important in facilitating the growth of firms. Different researchers have researched different aspects of the Nigerian environment and its impact on SMEs performance. For example, Eze & Ogiji (2013) assessed the impact of fiscal policy on the manufacturing output of Nigerian firms. Adelegan (2011) examined the effects of infrastructural development on the performance of Nigerian firms. Gado & Nmadu (2011) evaluated the infrastructural resource impact on textile companies’ performance. Few researchers have specifically studied the totality of the Nigerian market environment impacts on SMEs’ performance.
Recent events revealed that the World Bank’s ease of ‘doing business report’ of 2016 ranked Nigeria 169 out of 189 countries, though this position is the same as the previous year, yet it was regarded as a positive development because the nation’s ranking has been on the decrease in the last 8 years. The major indicators of ease of doing business are; starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and getting electricity. Specifically, the nation ranked 138th on starting a business, 174th on getting a construction permit, 182nd on registering property, 44th on getting credit, 32nd on protecting minority investors, 182nd on paying taxes, 181ston trading across borders, 138th on enforcing contracts, 140th on resoling insolvency and 180th on getting electricity. However, the 2019 ranking revealed a position of 146 in the country’s ranking of ease of doing business, the rank deteriorated to 146 in 2018 from 145 in 2017, though business confidence increased from 22.10 INDEX points to 28.20 points (World Bank Report, 2019).
Key Terms in this Chapter
Environmental Turbulence: High degree of uncontrollability of the environment.
Business Failure: It defines the inability of firms to meet performance targets and satisfy the stakeholders profitably.
Small and Medium-sized Enterprises (SMEs): These are operational Small and Medium Enterprises in Nigeria.
Organizational Performance: It is a measure of the accomplishment of the set objectives of a firm.
Macro-Environment: Are the uncontrollable factors external to the business unit.
Nigeria: It is a West African country and the venues of the research.
Industry Market Specific Factors: These are market uncontrollable factors operational in the immediate environment of the business.
Small and Medium Development Agency of Nigeria: This is a government agency that coordinates the activities of the Small and Medium Enterprises in Nigeria.
Business Environment: It is a combination of all factors both controllable and uncontrollable that affect the performance of a firm.