FACTOR INFLUENCING BEHAVIOR AND PERFORMANCE OF INDIGENOUS ENTREPRENEURS IN LAGOS STATE

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

One of the fundamental objectives of a responsible government is to ensure optimum standard of living. The post independence government adopted import substitution; large-scale industries by investing on large capital project which is predicated on the notion that "big is better" while "small is bad". Small and medium enterprises were considered as outmoded and synonymous with technological backwardness. (Nnanna 2001). Even the Structural Adjustment Programme (SAP) introduced to restructure and diversify the production and consumption pattern of the Nigerian economy created painful effects on small and medium enterprises and forced many operators in this sector to fold up their operation (Oni 2002).

After many years of neglect, most developing countries have appreciated the linkage between technological and the role of indigenous entrepreneurs (i.e. small business enterprises). In Nigeria, assistance from national and international institutions are rendered for promotion of this subsector. Despite the substantial assistance of these institutions and the various restructuring programmes adopted by the successive Nigerian Governments, little progress has been made in improving the standard of living, a lot of Nigerian are yet to leave poverty, the Nigeria's per capita income had been growing at 20.% annually hence it would take 35 years for the capita income to double from US$400 dollar to USD800 dollars (Lawal 2003). The decision of the federal government to withdraw from International Monetary Fund (IMF) in the interest of democracy, accountability and good. governance has created the need for the government to look inward and exploit the opportunities offered by these indigenous entrepreneurs through various programme initiated and supported by them.

Meanwhile studies on micro, small and medium scale enterprises have shown that entrepreneurs in these categories of business is a viable means of promoting self-reliance economic development as well as in accelerating the pace of industrial technology (Anyanwu 2000; Obitayo 2001; Lawai and Kio., 2001).

The 1988 census of Business conducted by the Federal Office of Statistics (FOS), revealed that 70%4 of the 220,000 industrial establishments surveyed were small and medium enterprises and accounted for 70%of industrial employment as well as 10-15% of the manufacturing input.

Fadahunsi (1992) stated that SMEs represent 900fo of the enterprises in the ACP (African, Caribbean and Pacific) countries. They also provide 70%z of employment opportunities for the citizens and promote indigenous technology. Also, Kurattko and Hodgetts (200 I) noted that small business employ 530/0 of the private workforce and accounted for 47% of sales and 51% of private sector gross domestic product (GDP). All these therefore show the predominance of SMEs in the economy of both developed and developing countries. These leads to the question, what classes of business are to be referred to as SMEs?

In the context of this study, indigenous entrepreneurs have been referred to as SMEs. Small scale could therefore be referred to as cottage industry. And they can be best described based on some of their characteristics:

·        Few numbers of employees

·        Ho amount of investmentandannual business turnovers

·        Small in size within the industry

·        Managers are also owners, etc (Ogundele 2007).

The 3rd Nigerian National Development Plan (1975-1980) defined small scale industry as a manufacturing establishment that employs less than 10 people and whose investment on machinery and equipment do not exceed N600,OOO (six hundred thousand naira). From another perspective, the Central Bank of Nigeria in 1995, in its credit guidelines defined Small Business Enterprises as any business organization with an annual turnover of less than NSOO,OOO (Five hundred thousand naira).

Ogundele (2000) defined Small Scale Enterprises as organizations employing a minimum or rive employees and with a minimum initial capital outlay of not less than N5000 five thousand naira) when such organizations were established between 1972 and 1986. Osuagwu (200 I} noted that an additional requirement to be tagged Small Scale Enterprises in Nigeria is that the number of employee is not greater than 50 in any situation and the financial capital outlay is not more than N50, 00 (one hundred and fifty thousand naira).

From the foregoing definitions, it could be seen that different individuals, institutions, or bodies and countries have given definitions to small scale enterprises. Therefore, as with entrepreneurship, it is difficult to have a generally acceptable definition of small scale enterprises, the best one can say is that small scale enterprises may be viewed as a business unit which is independently owned and managed and which does not dominate its relevant market segment of interest.

In Nigeria, the recent economic submit recommended the creation of 500,000entrepreneurs on the assumption that ifeachentrepreneur employs 100 workers, a tot83 number of 50 million jobs be created with the time frame.

Although, all these developments as commendable, however, the best way to eradiate poverty is not to throw money at if but to grow out of it.  The various efforts of the government (with focus of Lagos) on the development of small and medium scale enterprises through various assist8J1ce in highly initiative and well structured programmes to encourage vocational educational centre in the state.) with an interest of setting up those apportioned individuals as independent entrepreneur after successful completion of course proved abortive, the rate of survival of these newly set up enterprises a.re still very low which makes the effort of the Lagos State government to result in futility and also making individuals to still became job seekers as against the normal goal of being an employer of labour and definitely still giving chance to poverty.

Considering - this pathetic situation, for the governments effort on entrepreneurship development to be fruitful in Lagos State, these factors influencing the behaviour and performance of these indigenous entrepreneurs should be properly examined for success to be achieved.

However, in the context of this study the factors are to be considered on two broad basis, personality factors; effect of age, work experience and level of education will be considered and under environmental factors which these indigenous entrepreneurs cannot manipulate i.e economic, technological and social-cultural effects will be considered. (Ogundele 2003)

PERSONALITY FACTORS

The personality factors examine those embodied factors andcharacteristics with an individual' possess that gives predisposition of

indigenous entrepreneurs ranges from his ability to be innovative, intelligent, highly perseverance, internal locus of control, tolerance for ambiguity, leadership sand dynamism, working experience, good educational background and the rest of others.

However, in the context of this study we shall focus on three of these personality factors which are mostly of importance and crossly examine how they affect performance and behaviour.

(1)         LEVEL OF EDUCATION

Education exposes individuals to various acceptable societal conduct, so that of widens the thinking horizons of entrepreneurs in terms of foresight for opportunities and how to organize resources to exploit such opportunities. Over the years the level of education has not been considered significant as key-success factor that can affect both behaviour and performance. For instance, the recorded success of Igbo business men in Spare-Parts ozver the years have been quite commendable.

However, with the level of complexity and dynamic nature of the Lagos business environment, educational exposure is not only necessary but of great value and importance to nature a business enterprise from growth to survival.

(2)         EFFECT OF AGE

Certain age level as been identified by some scholars as a determinant of key success factor the age of the entrepreneurs should suit both features of vibrancy (i.e. ability to be agile and fast) and knowledgability (i.e. ability to take wise decisions). This helps the effort of the whole enterprises to be easily coordinated and channeled towards overall objectives age will definitely affect both behaviour and performance. For instance, in terms of behaviour, people who are advanced in age have been considered to possess a good leadership skill using their experience of life to properly coordinate effort of others.

(3)         WORK-EXPERIENCES

A possession of good work-experiences is also a determinant of success of the entrepreneur. This helps him to be aware of the challenges and loop holes that might affect the enterprises'. Also, certain business are affected by seasonal conditions, such experience will also go a long way to help in understanding the effect of such seasonal variations and conditions on the particular business.

Also, the effect of these factors on the level of performance cannot be overstated especially when technicalities are involve in the production

Under the environmental factors, the following forces will be considered, economic, technological and social-cultural factors. However, it is pertinent to know that indigenous entrepreneurs cannot control this environmental factors but work under certain confine to enjoy the effect of these environmental factors which can also be turned into exploitable opportunities.

1.   ECONOMIC FACTORS

The economic factors relates to the exact exchange rate, the tax system adopted, the inflation rate, the Gross Domestic Output, etc and how they affect the functioning of the enterprise. These economic forces should be properly taken cognizance of because there effect on performance could be adverse (i.e. becoming a threat) for instance, the steady fall in demand associated with unfavourable income level, the multiple tax system, are paramount economic factors to be considered if success is to be recoded by the indigenous entrepreneurs.

2.   TECHNOLOGICAL FACTORS 

The technological environment also affects indigenous entrepreneurs in terms of performance. The globally accepted various online mode of business transaction through the use of internet have also affected the performance of indigenous entrepreneurs. All these technological methods of transacting business require the indigenous entrepreneurs to take cognizance of latest innovative method of production if successes have to be recorded.

3.   SOCIAL – CULTURAL FACTORS

Socio-psychological factors are closely related to socio-psychological forces in theirs influence on behaviour. The social-cultural factors examine the way of life, belief, customs and traditions, philosophical values that affect business enterprises within the Lagos metropolis. Over the years, these factors have been attributable to the success or failure of indigenous entrepreneurs and also there effect on behaviour have been paramount for consideration.

From the foregoing it can be seen that certain factors affects both performance and behaviour while some affect only behaviours and others also affects only performance.

The main purpose of this paper therefore is to determine the relative importance of indigenous entrepreneurs (i.e small scale enterprises) in Lagos State and those factors influencing g their behaviour and performance and how these factors can be incorporated to improve the performance and behaviour of these indigenous entrepreneurs (i.e. small-scale enterprises) in Lagos State.

1.2 STATEMENT OF PROBLEM 

Despite programs put forward by the government to assist entrepreneurship development in Lagos State through the National Directorate of Employment (NDE Lagos Chapter) Vocational and Acquisition Centre, etc the success is still minimal compared to what is expected as a result of some personal and environmental factors that affects the performance and behaviour of indigenous entrepreneurs.

For the success of these indigenous~ entrepreneurs, the study has decided to properly investigate the environmental variable (i.e. economic, technological and social-cultural factors) and personality variable (i.e age, work experience and level of education) and also their effects on success of entrepreneurship development.

1.3 AIM AND OBJECTIVES OF THE STUDY

The present study is designed to investigate several factors that affect the performance and behavoiour of indigenous entrepreneurs (i.e small scale enterprises) in Lagos State. However, the factors have basically been grouped into environmental and personality factors. Under the environmental factors, the content of economic, technological and social cultural factors win be examine and also under the personality factors, the content of age, level of education, and work experience will be examined, thus removing the problem of narrowness of scope of determinants that are to be covered.

However, the supporting objectives that would aid the achievement of the above are listed below;

i.                    To examine those critical success factors required to enhance the development of indigenous entrepreneurs in Lagos State.

ii.                  To ascertain if the some factors are responsible for improvement in both performance and behaviour of indigenous entrepreneurs.

iii.                To determine those specific environmental factors that influence behaviour and performance of indigenous entrepreneurs (Le. small-scale enterprises) in Lagos State.

iv.                To ascertain if certain personality factors can influence both performance and behaviour of indigenous entrepreneurs.

v.                  To examine if various assistance on the path of Lagos State government to improve indigenous entrepreneurs performance has been fruitful.

1.4       RESEARCH QUESTIONS

At the completion of this study, the following research questions must have been answered:

a.         Does environmental and personality factors responsible for improvement in profit of indigenous entrepreneurs?

b.        To what extent does technological factor influence the sales and turnover of the indigenous entrepreneurs in Lagos State?

c.         To what extent does work experience as a personality factors affect behaviour of indigenous entrepreneurs?

d.        Why has various assistance of the path of Lagos State government improved small scale enterprises performance been abortive?

e.         How can social-cultural factors be incorporated to improve the turnover of indigenous entrepreneurs in Lagos State?

f.         To what extent does an economic factor affect the success of indigenousentrepreneurs?

1.5               RESEARCH QUESTIONS

The following are the null and alternative hypotheses;

Ho: There is no significant relationship between technological factor and performance of indigenous entrepreneurs in Lagos State

         HI:     There is significant relationship between technological factor and performance of indigenous entrepreneurs in Lagos State

Ho: There is no significant relationship between level of education and behaviour of indigenous entrepreneurs in Lagos State

HI: There is significant relationship between level of education and behaviour of indigenous entrepreneurs in Lagos State

1.6                  SIGNIFICANCE OF THE STUDY

In light of the role of indigenous entrepreneurs towards economic development of a country in terms of creation of gainful employment opportunities, increase in Gross Domestic Product (GDP), improvement in the level of per capitalincome and standard of living, provision of material inputs for large industries, reduction of regional economic balance, enhancement of self-sufficiency, alleviation of poverty, etc. It definitely becomes of paramount importance to promote the growth and survival of indigenous entrepreneurs. Also, considering the pace of economic development of developed countries, it becomes necessary that if Nigeria as a country also has to be economically and socially sound, small scale enterprises have to be given adequate attention.

Despite the effort of government to promote indigenous entrepreneurs in order to reap the benefits associated through various initiated and well structured programs, success is still very minimal as compared with the expected performance. Atimes, some indigenous entrepreneurs who started these enterprises cannot see it though as a going concern due to certain personality and environmental factors.

However, this study have decided to consider those key success factors that affect behaviour and performance of indigenous entrepreneurs and how they (Le. the factors) can be incorporated to improve the survival of

small scale business.

This study will therefore focus on how to sustain indigenous entrepreneurs from growth to survival so that Nigeria can have a share of the global economic development taking place all around the world.

1.7               SCOPE OF THE STUDY

The study will be focused on those factors that affect the behaviour and performance of indigenous entrepreneurs specifically within Lagos State basically under personality and environmental factors.

Under personality factors, the following effect will be considered, age, work experience and level of education. Also under the environmental factors, the importance effects of economic, technological and social cultural factors will also be considered on both performance and behaviour in order 0 remove narrowness of scope of the determinants that are to be covered.

1.8             LIMITATION OF THE STUDY

The study affects indigenous entrepreneurship development specifically in Lagos State. And also the effects of various governmental assistance program will slightly be examined  in the context of this study.

1.9               OPERATIONAL DEFINITION OF TERMS

The following terms will be explained within the context of this paper, they are as follows;

Behvaiour according to the business dictionary can be defined as response of an individual or group to an action, environmental, person or stimulus. It can also be defined as the aggregate of the responses or reactions or movements made by an organism in any situation.

Therefore, in the context of this paper certain factors will be considered that affects how indigenous entrepreneurs respond to actions, environmental, persons and stimulus and how this response affects the general success of the business.

Performance 

According to the business dictionary, performance generally implies accomplishments in a given tasks, measured against present standards of accuracy, completeness cost and speed.

Performance of indigenous entrepreneurs can be measured using yardstick such as sales, profit, turnover etc to evaluate the level of success achieved. This can be composed with the present standard.

Entrepreneur

An entrepreneur is regarded as the individual who perceives opportunities and take actions to obtain required resources for the provision of new and improved goods and services (Timmous, 1994 and Smilor, .1997}.

Drucker (1985) also defines the entrepreneur as the innovative individual who perceives business opportunities and organize the required resources to initiate a successful business activity for profit.

Kuratko and Hodegetts (2001) also dermed an entrepreneur as a person that perceives opportunities where others perceive chaos and confusion.

The characteristics of an entrepreneur include innovativeness, intelligence, internal locus of control, highly perseverance, dynamism, etc.

Entrepreneurship

As in the case of the origin of entrepreneur, the beginning of the evolutionary process of the concept «entrepreneurship" can be traced back to Centillion (1755), Say (1821) and Schumpeter (1934) who all wrote about entrepreneurship and its impact on economic development. Since those periods, writers have continued to attempt to describe or define what entrepreneurships stand for more particularly since the 1950s (Ogundele 2007).

Entrepreneurship can therefore be defined as a process that involves recognizing opportunities in the environment, mobilizing resources to take advantage of such opportunities, in providing improved goods and services to the ultimate consumers and making profit as a reward of risk. Entrepreneurship can also be defined as the non-continuous process of combining resources of time, man, money and material to create new goods, services and ideas. (Osuagwu 2001)

SMALL-SCALE BUSINESS

Business may be defined as the organized effort by individuals or companies to produce goods, services, or idea to exchange these goods, services and ideas with the relevant market of interest and to get some rewards for this organized effort (Silver; 1978)

In recent times, attention has been directed towards the contribution and role of Small Business Enterprises (SBE) within the world economy due to their contribution to economic development e.g employment creation, development of local technology, mobilization of savings etc.

Therefore, a small-scale enterprise may be seen as a business which is independently owned and managed and which does not dominate its relevant market segment of interest. (Giriffin and Ebert, 1996).

Indigenous entrepreneurs are individuals that exploit business opportunities in their local environment. They gather resources to exploit such perceived local opportunities thereby generating funds and creating employment opportunities. This indigenous entrepreneur can be related or said to be synonymous with small scale business owners.