Babcock Journal
of
Management
& Social Sciences
Volume 1. Number 2. June, 2003
© Faculty of Management and Social Sciences, Babcock University, 2003
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Published in June, 2003
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EDITORIAL BOARD
G K. Afolabi
M. B. Adegboye
S. A. Owolabi
A. D. Aina
S. A. Adebola
G. N. Okezie
-
Editor-in-Chief
Chairman
Associate Editor
Associate Editor
Associate Editor
Editorial Secretary/Business
Manager / Associate Editor
EDITORIAL AD VISERS
Prof A. Soyibo, University of Ibadan, Ibadan
Prof O. Ojo, Obafemi Awolowo University, Ile-Ife
Prof J. A. Ayoade, University of Ibadan, Ibadan
Prof P. E. Oribabor, Obafemi Awolowo University, Ile-Ife
Mr. Layi Afolabi, Wema Bank PLC, Wema Building, Lagos
EDITORIAL CONSULTANT
Prof J. A. Kayode Makinde, Babcock University, Ilishan-Remo
EDITORIAL COMMENT
VISION STILL AFLAME
In the month of September, 2002, the maiden Edition of Babcock Journal
of management and social sciences (BJMASS) was published. The
positive, critical reception of that publication challenged us into the
second edition enterprise.
Like Nigeria which concluded elections into the second civilian
democratic transition on the 4th of May, 2003, we are focused on
continuity in:
-
Contributing to the current quality of academic knowledge and
skills;
Improving the socio political status of the 21st century Nigeria
and
Providing concepts for re-engineering the socio – Political and
economic development of Nigeria
We again wish to confirm that the views and opinions of the contributors
not necessarily those of Babcock University Administration.
Dr. Gabriel K. Afolabi
Editor-in-Chief
Babcock Journal of
Management and Social Sciences
Volume 1. Number 2. June, 2003
Section One:
Political Leadership, Dialectics of Politics and Broadcast Research
1.
Towards the search for sustainable political leadership in Nigeria: A Biblical Option
Sampson M. Nwamoah................……………………………………..
2.
The Dialectics of Politics and Governance in Nigeria's Fourth Republic
- Solomon O. Akinboye...….....................................................................……….
3.
Broadcast Research and its Developmental Role in Mass Communication.
- Olufemi Onabajo..................................................................................……….
Section Two:
Empiricism, Labour Remuneration and Corporate Planning.
4.
An Empirical study of the Optimum Hospital Bed Capacity in the Lagos
State Health Care Delivery System A Geodemographic Perspective
- Solomon A. Adebola...............................................................................………
5.
The Beneficial and cost implications of an improper increase in Labour
Remuneration in the Nigerian Economy - hvarere Henry Taiwo..........................
6.
The impact of Corporate Planning on the Financial Performance of
the Beverage Industry in Nigeria - O.I. Nwazue.................................................…
1
8
26
33
50
59
Section Three
Management Information System, Small/Medium Scale Industries and Employee's
Productivity.
7.
The Development of a Computer - Based Management Information System Model for
Secondary School Administration in Ogun State - Ajayi Olutayo B..................……. 69
8.
An Assessment of Small and Medium Scale Industries Performance in
Nigeria - J. A. Bamiduro.....................................................................................……. 77
9.
Motivational effects on the Employee's Productivity
- Stella Ogechukwu Okezie......................................................................................
87
Section Four
Research Supervision, Port folio formation and Environmental Degradation.
10.
Issues in the effective supervision of students' Research Projects
- Olawale J. Omotosho...........................................................................................
11.
An Empirical Investigation into the Portfolio formation and Diversification
Potentials of the Nigerian Stock Exchange - Jackson O. Olujide..........................
12.
Environmental Degradation in Nigeria : Trade - off for Poverty
Alleviation - Adeyinka Sunduv Okude...................................................................
96
108
118
An Assessment of Small and Medium Scale Industries
Performance in Nigeria
J. A. Bamiduro*
INTRODUCTION
In the mid-1960s, a new approach to small and medium-scale enterprise (SME)
development began to emerge due to a number of factors. First, there was growing
concern over low employment elasticity of modern, large-scale production. It was
claimed that even, with more optimal policies, this form of industrial organization was
unable to absorb a significant proportion of the rapidly expanding labour force (Chenery
1974; ILO, 1973). Second, there was widespread recognition that the benefits of
economic growth were not being fairly distributed, and that the use of large-scale,
capital-intensive techniques was partly to blame. Third, empirical diagnosis showed that
the causes of poverty were not confined to unemployment, and that most of the poor were
employed in a large variety of small-scale, low-productivity activities. Thus, it was
thought that one way to alleviate poverty could be to increase the productivity' of those
engaged in small-scale production (Aftab and Rahim, 1989).
Small and medium enterprises (SMEs) also contribute to long-run industrial
growth by producing an increasing number of firms that grow up and out of the smallscale sector. The emergence of wholly modern small and medium scale Nigerian
industries is likely to be a prerequisite for any enduring industrialization.
However, despite government efforts in Nigeria to promote SMEs, not much
progress seems to have been achieved, judging by SMEs performance. The managerial
capacity of private Nigerian entrepreneur has often been questioned (Kilby 1969, Harris
1968,' 1972, Akeredolu-Ale 1975). Recently, Kilby (1988) reaffirmed his proposition of
the existence of a managerial, bottleneck among private African entrepreneurs in the
manufacturing industry. Evidence of the managerial bottleneck were the low value-added
shares of African SMEs and the dearth of firms in the 20-49 employees and 50 or more
employees categories.
Nonetheless, it is pertinent to examine the management practices of small and
medium enterprises (SMEs) in Nigeria in order to isolate areas in which the practice may
constitute a constraint on the expansion of the firms. Specifically, this study focuses on
the performance of small and medium enterprises (SMEs) in post SAP era in Nigeria with
particular reference to Kwara State.
OBJECTIVES OF THE RESEARCH
Both cross-sectional and time -series data suggest that the industrialization
process normally involves initial rapid growth of production in small and medium scale
enterprises, some of which may expand into large - scale firms or survive in market
niches even as large-scale industries gradually come to industries dominate the size*Dr.J. A. Bamiduro is a "Lecturer in the Department of Business Administration,
University of Ilorin, Kwara State, Nigeria.
.
77
78
BJMAS VOL. 1 NO. 2 JUNE 2003
distribution (Anderson 1982; Cortes 1987, Staley and Morse 1965; Nanjundan 1987).
Previous studies by eminent scholars have provided insights into the
contributions of SMEs in Nigeria. Nation wide surveys was conducted by the Federal
Ministry of Industries on the impact of existing SMEs on the economics of each state and
have examined their linkage effect and performance of established Industrial
Development Centres (IDCs). Based on the foundation of such surveys, the objectives of
this study are to:
Assess the performance and contributions of SMEs to the development of the
economy of Kwara State particularly to employment, value-added, development of local
technology, development of local sources of raw-materials, sources of capital as well as
consumption and generation of energy.
Assess the management styles of existing SMEs;
Ascertain the size, scale, capacity utilisation and profitability of SMEs in relation to their
performance.
LITERATURE REVIEW
In Nigeria, studies on performance has been on the behaviour of financial
institutions, particularly banking institutions. Extensive empirical works on loans
portfolio behaviour have been carried out by Ajayi (1972,1977,1978), Tomori (1972),
Teriba (1974), Ojo (1974), Akinnifesi and Phillips(l 978), and Ajayi and Ojo (1981).
These studies, however, were only implicitly concerned about the structureperformance hypothesis.
Studies that actually tested the structure-performance hypothesis are indeed
vary. They include Ajayi (1986), Lambo (1986a,l 986b), Oyejide and Soyode (1986),
Oyejide (1986) and Teriba (1986).
Ajayi (1976) carried out an empirical study of portfolio behaviour of
commercial banks in Nigeria using a stock adjustment model which sought to
demonstrate that the actual holding of an asset is not necessarily equal to the desired level
or value of that asset at any point in time. He found that the interest elasticity' of the
demand for treasury bills is very low and this has a negative implication for the control of
money supply through open market operations. Lambo (1986) tested two hypotheses with
respect to commercial bank portfolio management, namely, project maximization and
accommodation principle to see which is more relevant to the Nigerian banking industry.
The variables employed were derived mainly from the assets portfolio.
The results of regression analysis reported by Lambo appeared to lend more
support to the relevance of the project maximization hypothesis.
Oyejide and Soyode (1986) appears to be the major work that set out explicitly
to test the structure-performance hypothesis in Nigeria's banking industry. Using relative
shares of deposits and loans and advances they captured the effect of market structure by
size distribution of banks in the industry. The regression results showed that market
structure is significant determinant of the performance of commercial banks.
The models and studies focusing on the entrepreneur
Before organization, there are pre-organisation (Katz & Gartner 1988) Initially
they exist only as the thought, ideas, or dreams of an individuals. Through the start up
BJMAS VOL. 1 NO. 2 JUNE 2003
79
process, the founder's thoughts are sometimes translated into a pre-organisation and then
sometimes an organization, central to the process is the founding individual. The
entrepreneur in whose mind all the possibilities come together, who believe that
innovation is possible, and who has the motivation to persist until the job is done.
Early research in entrepreneurship focused therefore on the entrepreneur. It
sought to determine what personality characteristic distinguished entrepreneurs from nonentrepreneurship, and examined the influence of there characteristic on organization
formation rates. For example, such factors as the need for achievement (Me Clelland,
1961) risk-taking propensity (Brockhaus, 1980), locus of control (Brockhaus 1982),
tolerance of ambiguity (Scherz, 1982) and a desire for personal control (Grambeyer &
Sexton, 1988) have been identified and examined as positive traits associated with
entrepreneurial behaviour. Altogether, the combination of psychological traits interacting
with background factors makes some individual more likely entrepreneurial candidates
than others.
In this study an attempt to uncover what hinders or promotes entrepreneurial
development in terms of analysis of the performance of small and medium scale
enterprises in Kwara State in post structural adjustment era are highlighted.
METHODOLOGY
INSTRUMENT DESIGN
The research instruments consist of structured questionnaire used for data
collection. The major objective in designing the instrument was to make possible the
collection of such data that would be pertinent to the successful conduct of the
investigation. Hence, the instrument was designed such as to:
i.
elicit personal information
ii.
elicit information having to do with the entrepreneur's performance in
term of survival strategies, scale size and capacity utilization, liquidity
and profitability of operation, source of finance and reason for
mortality.
In the process of conducting the depth interview, the order in which the question
were presented varied from one interview to another. However, interview respondents
were encouraged to elaborate or explain reason for answers. A content analysis of the
transcription of the interviews was performed and subsequently a draft questionnaire was
prepared there from.
VALIDITY OF INSTRUMENT:
Validity deals with whether the instrument is truly measuring the specific trait
that it is supposed to measure (Huilc, Cornier and Bonds 1974). Therefore, the more
adequate the measurement, the more valid is the instrument (Selltiz & Wrightsman ,
1976)
The initial draft of the research instrument, a questionnaire, was first subjected
to face Validation by experts in entrepreneurial's development from Industrial
Development Centre and Centre for Management Development. Their critical comments
led to the modification of some of the items on the questionnaire.
82
BJMAS VOL, 1 NO. 2 JUNE 2003
Financing and Accounting Audit. Table 1.1.4 Variable
Group Industry
Mean
Std. Dev.
Std. Error.
1. Agro-based
2.00
.84
.21
2. Confectionery
3.00
1.05
.33
3. Chemical
1.75
85
.19
4. Iron, Eng.
2.90
1.14
.16
5. Soap/Detergent 2.43
1.52
.30
6. Text/Leather
2.60
.50
.10
7. Woodwork
3.14
1.47
.24
8. The repairs of
Motor
2.00
.00
.00
Ovaerall
2.75
1.23
.08
Source-Researcher's Survey Report 2000
95% Conf. Interval
1.53 - 2.46
2.24 - 3.75
1.35 - 2.14
2.57 - 3.22
1.76 - 3.03
2.39 - 2.80
2.63 - 3.65
4.00 - 4.00
2.56 - 2.91
Table 1.1.6 shows the pairs of mean that are significantly different at 0.05 level. Here, the
repairs of motor vehicle/services are significantly different from the rest of the group; in
book keeping. Given this revelation, it would be considered appropriate since most
components used in motor vehicle repair works were purchased by vehicle owners and
brought along for repairs, for example, engine oil, filter and other accessories are
normally predetermined. It thus makes the record keeping of entrepreneur in this industry
easy.
II.
Table 1.1.7 Variable Statistics for Marketing Audit Analysis
Table 1.1.7 Analysis of Variance for Marketing Audit
Sources
D.F
Sum of
Mean Square
F Ratio
F Prob.
Square
Between Group 7
62.64
8.94
7.13
.0001
Within Group
187
234.53
1.25
Total
194
297.17
Source-Researcher's Survey Report 2000
Table 1.1.7 shows that the observed F-ratio — 5.78 is greater than F. Probability = .0001
at the critical value of 7 and 187 degrees of freedom. We thus reject the null-hypothesis of
equality of the means of the variables of marketing audit of company's product reaching
final consumers promptly for all groups in the survey.
1.1.8
PERFORMANCE BASED ON ATTITUDE AND MOTIVATION OF
STAFF
Performance based on attitude and motivation of staff is directed more on task
performance process. Group industry 3, the Chemical/Pharmaceutical industry has
variable rating of means of 13.8 which is very close to the mean square of 13.5. In
BJMAS VOL. 1 NO. 2 JUNE 2003
83
contrast, group industry 8, the repairs of motor vehicle/service industry has a mean of
16.0, the highest in the study group. Though, it is still significant at 95% confidence
interval, which shows that staff in the motor vehicle/service industry were motivated and
their attitude towards work was higher which affected their performance, whereas staff in
chemical/foam, plastics and pharmaceutical industries were not so motivated, as revealed
by the survey findings.
The result is reasonable when the time of the survey is considered. Basically,
any job or vehicles brought for repairs were attended to promptly, possibly due to the lull
in business activities experienced during the time. The chemical industry was actually
faced with retrenchment fever during the time of the survey, hence the negative outcome
on attitude and motivation of staff in this industry.
To further investigate the validity of this outcome, the equality of the means of
the group industry was carried out. Equity of means is an ANOVA statistical procedure
used to test the hypothesis that several population means are equal.
Table 1.1.8 Summary of Response on Attitude and Motivation
1
2
3
4
5
6
7
8
Group Industry
Agro-based
Confectionery
Chemical
Iron/Eng.
Soap/Detergent
Text/Leather
Woodwork
Repairs of Motor
Overall
Mean
14.3
14.5
13.8
15.4
14.4
15.6
14.3
16.0
14.85
Std. Dev.
3.41
.52
1.33
1.87
3.06
.50
.89
.00
1.93
Std. Error
.88
.17
.30
.27
.61
.10
.15
.00
.14
95% Conf. Interval
12.44 - 16.22
14.12 - 14.88
13.13 - 14.37
14.87 - 15.93
13.13 - 15.67
15.39 - 15.80
13.98 - 14.59
16.00 - 16.00
14.57 - 15.11
Source-Researcher's Survey Report 2000
The equality' of the means of the group constituting attitude and motivation was tested
using one-way analysis of variance techniques.
Table 1.1.9
Analysis of Variance for Attitude and Motivation
Sources
D.F
Sum of Square Mean Square
F Ratio F Prob.
Between Group 7
94.66
13.52
4.00
.004
Within Group
187
630.72
3.37
Total
194
725.38
Source-Researcher’s Survey Report 2000
Table 1.1.9 Shows the observed F-ratios=4.00 is greater than the critical value which at 7
and 187 degrees of freedom, P = .004 at 95% confidence interval. Thus, we reject the null
hypothesis of equality of the means of the variable on attitude and motivation for all
groups in the surveyed industry.
To investigate the nature of differences of the means, the scheffe’s multiple
comparison test at 0.05 significance level was executed on the data. The outcome is on
the
84
BJMAS VOL. 1 NO. 2 JUNE 2003
Table 2.1.0
Scheffe's Multiple Comparison Test for Staff Being Committed An
Attitude and Motivation Variable (B01 byA04)
Group Industry
1
2
3
4
5
6
7
8.
Group Outcome
3 7 5 6 4 1 2 8
* *
* *
Agro based
Confectionery
Chemical
Iron, Eng.
Soap/Deter.
Textiles/Leather
Woodwork
Repairs of Motor * *
Mean
Std. Dev.
4.00
4.00
3.00
3.70
3.60
3.60
3.29
4.00
.84
.00
.00
.46
.81
.50
.45
.00
Source-Researcher's Survey Report 2000
Table 2.1.0 shows pairs of means that are significantly different at 0.05 level which are
indicated with an asterisk. The Agro-based food processing, confectionery and repairs of
motor vehicle industries are significantly different from the other group especially the
Groups 3 and 7, that is the chemical/pharmaceuticals and woodwork industries, when it
comes to job commitment and knowledge about assigned task.
CONCLUSION AND RECOMMENDATION
The findings of the study tend to re-inforce findings of the earlier research on
the performance appraisal of small and medium scale entrepreneurs.
The entrepreneurs or operators of SMEs have a lot to do in the areas of
management practice and concepts, and their marketing activities. The environment in
which the SMEs operates, the study suggests, are so disorderly undermanned and cash
poor with the consequence that the management of these organisation cannot afford the
luxuries enjoyed by large firms. Yet the management of these organisation must operate
in most cases like the manager of the big, well-organised firms. They serve almost the
same market which they must equally satisfy. Furthermore, SMEs must also plan,
organize, direct, control, coordinate and without the resources in terms of financial to
have or employ full time planners, consultants, which are essential to performing these
functions. It was found out that the "sole" in most cases performs strategic management
function without much recourse to allowing subordinates to have inputs (70%) of
respondent agreed that it was the "sole" that determines future direction while only 2.5
percent agreed that everyone in organization participated. There is need to expand the
span of control of SME operators to allow for proper delegation to subordinates. After
many years of introduction of the structural adjustment programme (SAP) in Nigeria,
utilization levels of installed capital have seriously worsened rather than improved in
Kwara State
BJMAS VOL. 1 NO. 2 JUNE 2003
85
manufacturing in particular and Nigeria in general, whereas, the Pre- SAP unweighted
capita] utilization levels at the industry wide level) were 69.4 percent, 60.3 percent 57.0
percent and 54.8 percent for 1983, 1984,1985 and 1986 respectively, (Aigbokhan, 1989),
in 1988 and 1989 (post SAP years), the utilization rates were 35.3 percent and 36.5
percent (Egbon, 1990) respectively and in 1999 32.5 percent (as portrayed in this study).
Government therefore should make a concerted efforts at improving the efficiency of the
provision of infrastructural facilities especially the electricity supply to boost
productivity.
In order to improve the lot of SME’s, the state government should provide long
and short term credit facilities to SMEs in grand policy of state financing scheme with
adequate management services from relevant industries to backup. Furthermore, frequent
changes in government policies brought about by changes in government was responsible
for series of unfavourable regulation which impeded production activities and seriously
affected the performance of SMEs. For optimal performance, the Nigerian government
both at Federal and State levels must ensure good governance and exercise strong
political will to implement required reforms geared towards optimal performance of the
economies in terms of availability of infrastructural requirement, regular supply of
electricity, good road network, adequate transportation and communication system etc, as
SMEs faced the challenges posed by globalization, liberalisation and technology in this
new millennium.
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