DETERMINANTS OF SUCCESS IN SMALL AND MEDIUM SCALE ENTERPRISES (SMES) IN NIGERIA
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Small and medium-sized enterprises (SMEs) are defined differently around the world. The country in which a business operates determines the precise dimensions of a SME. According to O’ Regan et al. (2004), the classification of a corporation as a small or medium-sized enterprise (SME) can be based on a variety of parameters that vary by country. The characteristics include annual revenue, number of employees, and total corporate assets, or any combination thereof. Additionally, the United States defines SMEs varies across industries.
SME Definition in the United States
As indicated previously, the United States adheres to diverse definitions and rules for SMEs that vary by industry. The United States also has an industry-specific definition of small and medium-sized enterprises (SMEs). For instance, a company in the manufacturing industry can have up to 500 people and still be considered a SME, but a company in the wholesale trade can only have 100. There are also differences between the sectors of an industry. In the mining business, for instance, companies that mine for nickel or copper ore might have up to 1,500 people, whereas a silver mining company can have no more than 250 employees and still be classified a small or medium-sized enterprise (O’ Regan et al., 2004).
Canadian SMEs
In Canada, SMEs are organizations with less than 500 employees. Companies with 500 or more employees are defined as large firms. Industry Canada, an institution tasked with fostering economic and industrial growth in Canada, defines small enterprises as those with less than 100 employees, providing they create commodities. The threshold for service-providing small firms is 49 or fewer employees. Günterberg et al.,2004. Companies that fall between these employee-count thresholds are categorized as SMEs.
Statistics Canada, which conducts research and gathers data on enterprises and commerce, complies with the stipulation that SMEs have no more than 499 employees. Nonetheless, it also requires, based on research and data gathered, that SMEs have less than $50 million in gross revenue.
Small and medium-sized firms constitute a considerable share of the overall number of worldwide businesses. It is crucial to realize that, despite similarities, each country, as well as the industries and sectors within it, may have distinct definitions for a small or medium-sized enterprise (SME). Günterberg et al.,2004.
II Importance of small and medium-sized enterprises to national economies
There is rising evidence around the globe that SMEs play a crucial role in the economic development of any country. The importance of small and medium-sized enterprises (SMEs) is growing in emerging countries, transition economies, and developed economies alike. Günterberg et al.,2004.
In market economies, the SME sector is the engine of economic growth. Due to their private ownership, entrepreneurial spirit, flexibility and adaptability, as well as their ability to respond to difficulties and shifting surroundings, SMEs significantly contribute to sustainable growth and job creation.
The private sectors of many emerging nations lacked the medium level of development until recently. Investors, legislators, and experts focused the majority of their efforts on large organizations with over 500 people, larger enterprises, and multinational corporations. Large firms and multinational corporations were the focus of tax advantages and subsidies, whilst the World Bank and UNDP supported micro-enterprises, which typically have fewer than five employees. In between these two extremes are the SME companies. Günterberg et al.,2004. In the past, it was believed that small and medium-sized enterprises (SMEs) were not the engine that drove the economy, hence it was seen unnecessary for the government to focus its policies on them. However, in recent years there have been a plethora of potential attempts to support the SME’s functioning in critical parts of emerging economies, not only through investments but also business leaders who realize the importance of SME’s in the development of a sustainable economy.
The presence of small and medium-sized enterprises in national economies is growing.
The percentage of this occurrence is displayed below:
Greater than 99.9% of companies are present (Japan, US, Germany, China)
66% of workers in Japan, 53% in the United States, and 68% in Germany.
55% in Japan, 51% in the United States, and 455 in Germany.
They contribute significantly to the national economy by supplying a variety of goods and services, generating employment opportunities, fostering the growth of regional economies and communities, fostering market competition, and fostering innovation.
Their primary presence is in the manufacturing, distribution, and services industries.
III sector for SMEs in Nigeria
The economies of both industrialized and developing nations depend on small and medium-sized businesses, who are incorporating e-commerce to enhance their business strategies Payne (2009). Despite the promising nature of Nigerian SME development in terms of economic growth, technology, and job creation, there is a lack of work possibilities. According to studies, they are unable to integrate e-commerce in their operations due to a lack of technological expertise on the part of their managers as well as inadequate infrastructure, ignorance, corruption, poverty, and lack of security. Humphrey and Co. (2003).
Oyelaran-Oyeyinka and Lal, based on a 2002 survey of enterprises in the auto-components, food and beverage, electronic goods, and engineering production sectors in Uganda and Nigeria, determined the following: (2004). The objective was to identify factors that influenced SME and microenterprise adoption of e-business. The authors discovered that the adoption rate of e-business was greater in the highly skilled electrical and electronic goods sector than in the more labor-intensive auto-components and food and beverage sectors. The Nigerian survey included 105 engineering industry SMEs and microbusinesses (with fewer than 10 employees). It was observed that one-third of businesses did not use any ICTs, especially those whose managers possessed inadequate academic credentials. In addition, organizations that embraced e-business at a greater level had managers with technical backgrounds and more skilled employees (engineering graduates) among their workforce. Their belief was that poor skill levels among SMBs were a major factor in their low ICT adoption.
The primary barrier to Internet adoption in most companies in both developed and underdeveloped nations is comparable. Companies in Europe, Latin America, Africa, and Asia said that internet security was a key hindrance, followed by inadequate network connectivity. Evidence from Asia and Africa (Nigeria) revealed that firms whose owners had had a higher level of education and possessed management skills were more likely to use emerging technology.
DETERMINANTS OF SUCCESS IN SMALL AND MEDIUM SCALE ENTERPRISES (SMES) IN NIGERIA
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