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NWANAH CHIZOBA PATIENCE
PG/M.Sc/08/47408
THE ROLE OF ENTREPRENEURSHIP IN THE
ECONOMIC DEVELOPMENT OF THE CHEMICALS AND
PHARMACEUTICALS INDUSTRY IN ENUGU STATE,
NIGERIA
DEPARTMENT OF MANAGEMENT
FACULTY OF BUSINESS ADMINISTRATION
Nwamarah Uche
Digitally Signed by: Content manager’s Name
DN : CN = Weabmaster’s name
O= University of Nigeria, Nsukka
OU = Innovation Centre
THE ROLE OF ENTREPRENEURSHIP IN THE ECONOMIC
DEVELOPMENT OF THE CHEMICALS AND
PHARMACEUTICALS INDUSTRY IN ENUGU STATE,
NIGERIA
NWANAH CHIZOBA PATIENCE
PG/M.Sc/08/47408
DEPARTMENT OF MANAGEMENT
FACULTY OF BUSINESS ADMINISTRATION
UNIVERSITY OF NIGERIA
ENUGU CAMPUS
MAY, 2014
The Role of Entrepreneurship in the Economic Development of the
Chemicals and Pharmaceuticals Industry in Enugu State, Nigeria
By
Nwanah Chizoba Patience
PG/M.Sc/08/47408
A Dissertation Submitted in Partial Fulfillment of the Requirements
for the Award of the Master of Science
(M.Sc) Degree
Presented to the
Department of Management
Faculty of Business Administration
University of Nigeria
Enugu Campus
Supervisor: Dr. E.K. Agbaeze
MAY, 2014
DECLARATION
I, Nwanah Chizoba Patience, a Postgraduate student in the Department of
Management, Faculty of Business Administration, University of Nigeria, Enugu
Campus with Registration Number PG/M.Sc/08/47408 do hereby declare that the
work embodied therein is original and has not been submitted in part or full for
any other Diploma or Degree in this or any other Institution.
____________________
Nwanah Chizoba Patience
PG/M.Sc/08/47408
Date ________________
APPROVAL
This thesis has been approved for the Department of Management,
Faculty of Business Administration, University of Nigeria, Enugu Campus.
___________________
Dr. E.K. Agbaeze
Project Supervisor
__________________
Dr. V. A. Onodugo
Head of Department
Date _______________
Date ______________
DEDICATION
This study is dedicated to God Almighty for His mercies and protection
ACKNOWLEDGEMENTS
I want to appreciate God for giving me the opportunity to study at the University of
Nigeria, Enugu Campus, despite my very tight schedule. He has not only given me
the opportunity to study but also provided a man after his heart as my supervisor, in
the person of the tireless motivator, Dr. E.K. Agbaeze. He was very helpful,
painstaking, encouraging and displayed unprecedented commitments to his
responsibilities to the completion of this work.
I cherish the contribution of Prof. U.J.F. Ewurum, whose cooperation and academic
discussion helped to ease the pursuit of this research study. I extend my heartfelt
gratitude to all the lecturers in Management Department Dr. V.A. Onodugo, the
Head of Department, Dr. A.I. Ogbo, Dr. C.A. Ezigbo, Dr. O.C. Ugbam and others.
I am equally grateful to Mr. I.G. Obiora who read over the work and displayed a lot
of intellectual clout, which was rewarding and stimulating.
Financial and moral support of my mother, brothers and sisters is highly
appreciated. I am also very grateful to my friends Chioma Okoye and Arch James
Obiano, that contributed in several ways in making this work a reality.
To the external examiner, whoever he/she may be, i remain greateful for the
expected correction that may be suggested to improve on the status of this work.
Furthermore, I am highly indebted to my computer typist Ngozi Dede of No. 10
Cameroun Lane, Uwani Enugu whose painstaking carefulness resulted in this
masterpiece. I am also highly indebted to the staff of the University of Nigeria,
Enugu Campus (UNEC) Library for unguarded assess they gave me during the
course of this exercise. To all research institution I consulted during this exercise, I
owe alots. I am highly grateful to Almighty God for life, determination and zeal to
complete this work which He bestowed on me all through the period of research and
compilation.
TABLE OF CONTENTS
Declaration
ii
Approval
iii
Dedication
iv
Acknowledgment
v
List of Tables
ix
List of Figures
xi
Abstract
xii
CHAPTER ONE
INTRODUCTION
1.1
Background to the study
1
1.2
Statement of the problem
5
1.3
Objectives of study
6
1.4
Research questions
6
1.5
Research hypotheses
6
1.6
Significance of the study
7
1.7
Scope of the study
7
1.8
Limitations of the study
7
1.9
Definition of terms
8
1.10
Profile of Participating Institutions
9
References
10
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1
Introduction
11
2.2
Conceptual Framework
11
2.2.1 Entrepreneurship – a Conceptual and an Historical
Overview
11
2.2.2 Chemicals and Pharmaceuticals Industry in Enugu State –
A Cursory Look
2.2.3 Requirements for Successful Entrepreneurship
16
19
2.2.2 Chemicals and Pharmaceuticals Entrepreneurs in Enugu State
2.3
Theoretical Framework
22
2.4
Empirical Review
27
2.4.1 Entrepreneurship and Economic – An Empirical
Approach
27
2.4.2 Framework for Analyzing Entrepreneurship and
Economic Development
32
2.4.3 The Entrepreneurial Roles and Functions in the
Development of the Economy
35
2.4.4 The Economic Imperatives of Entrepreneurship Development
in Nigeria
38
2.4.5 Role of Financial Institutions in the Development of
Entrepreneurship in Nigeria
40
2.5
Government Entrepreneurial Policies
42
2.6
Macro-Economic Policies
49
2.7
Entrepreneurship and Managerial Problems
50
2.7.1 Problems and Causes of Business Failure
2.8
in Nigeria
54
Summary of the Review of the Related Literature
56
References
57
CHAPTER THREE
RESEARCH METHODOLOGY
3.1
Introduction
61
3.2
Research Design
61
3.3
Sources of Data
61
3.3.1 Primary Sources
61
3.3.2 Secondary sources
61
3.4
Population of the Study
62
3.5
Determination of sample size
62
3.6
Sampling Procedure
63
3.6
Description of the research instrument
64
3.7
Validity of the instrument
64
3.8
Reliability of the instrument
64
3.9
Data analysis Techniques
66
References
68
CHAPTER FOUR
DATA PRESENTATION AND ANALYSES
4.1
Introduction
69
4.2
Demographic data presentation
69
4.3
Analysis of Research Questions
72
4.4
Test of Hypotheses
82
4.5
Findings and discussions
90
References
92
CHAPTER FIVE
SUMMARY OF MAJOR FINDINGS, RECOMMENDATIONS AND
CONCLUSION
5.1
Summary of major findings
93
5.2
Conclusion
93
5.3
Recommendations
93
5.4
Suggested areas for further studies
94
Bibliography
96
Appendix 1
Appendix II
Appendix III
LIST OF TABLES
Table 2.2:
Development of Entrepreneurship
Theory and Term
12
Table 3.1:
Population Distribution
62
Table 3.2:
Tabular Presentation of Sample
Size
64
Table 3.3:
Test-retest Computation Detail
65
Table 4.1:
Questionnaire Distribution
69
Table 4.2.1:
Gender distribution
70
Table 4.2.2:
Marital Status
70
Table 4.2.3:
Age Bracket
71
Table 4.2.4:
Academic Qualification
71
Table 4.2.5:
Number of Years of Service
72
Table 4.3.1:
Entrepreneurship has contributed
Meaningfully to Economic
Development
Table 4.3.2:
73
Entrepreneurship Fosters Economic
Development through Job
Creation
Table 4.3.3:
73
Entrepreneurship plays a Significant
Role in the Economic
Development
Table 4.3.4:
74
Entrepreneurship is Imperative in
Economic Development of Enugu
State
Table 4.3.5:
75
Respondents Views that the
Indigenization Policy of 1973
was aimed at Boosting
Entrepreneurship
Table 4.3.6:
75
Indigenization Policy Afforded
Nigerians Opportunities to Float
SMEs
76
Table 4.3.7:
Indigenization Policy has
Contributed
to Entrepreneurship
Culture
Table 4.3.8:
77
Government Entrepreneurial Strategies
have improved Entrepreneurial
Organizations
Table 4.3.9:
77
Entrepreneurial Culture be Facilitated
by Individual, Micro and
Government's Encouragement
Table 4.3.10:
78
Government can Facilitate the
Development of Entrepreneurial
Culture through the Creation of
Enabling Laws and Financial
Aids
Table 4.3.11:
79
Government can Foster
Entrepreneurial Development
through Infrastructure
Development
Table 4.3.12:
79
Difficulties in Accessing Loan is
one of the Challenges of
Entrepreneurship
Table 4.3.13:
80
Lack of Adequate Managerial Skills
Pose Great Challenge to
Entrepreneurship
Table 4.3.14:
81
Recognition of Viable Business
Opportunity is one of the
Problems of Entrepreneurship
81
Table 4.4.1:
Contingency Table I
84
Table 4.4.2:
Contingency Table II
85
LIST OF FIGURES
Figure 2.2.1: Strategic Framework of the PRS
17
Figure 2.1.2: Entrepreneurial Success Three
21
Figure 2.3.1: The Wenneker and Thurik
Model
Figure 2.3.2: The GEM Conceptual Model
24
25
ABSTRACT
The study centered on the role of entrepreneurship in economic development of
chemicals and pharmaceuticals industry Nigeria (focusing on Enugu State). The
study aims at pursuing the following objectives: to find out the significant role of
entrepreneurship in economic development of Enugu State; to ascertain the extent
that government policies have improved the performance of entrepreneurial
organization in Enugu State; to examine the extent to which macroeconomic
policies foster entrepreneurship culture in economic development of Enugu State,
and to identify the challenges of entrepreneurship in economic development in
Enugu State.The study had a population size of 1100, out of which a sample size of
293 was realized using Taro Yamane's formula. The study employed a survey
research design. The instrument used for data collection was the questionnaire
which was structured in line with likert five point rating scale and was validated.
The instrument was checked for reliability, using pilot study and spearman's ranking
order correlation coefficient. A total number of 293 questionnaires were distributed
while 285 copies were retrieved. The data from the responses were presented using
frequencies, simple percentages and cumulative percentages. Four hypotheses were
tested using the chi-square (X2) and F-test statistical tools. The study found out that:
entrepreneurship plays significant (X2ccal = 33.125 > X2t0..5 = 7.962); there are
positive significant roles of entrepreneurship in economic development of Enugu
State (X2cal = 15.965 > X20.5 = 7.962); government policies to an extent improve
the performance of entrepreneurial Organization in Enugu state (Fc -test = 8.08 >
Ft1 = 2.87); macroeconomic policies positively foster entrepreneurial culture (Fc test = 8.08 > Ft1 = 2.87) entrepreneurship is challenged by finances in economic
development of Enugu State. The study, based on the above findings, concluded
that a comprehensive approach to the promotion of entrepreneurship rested on
favourable economic policies, entrepreneurial skills/culture and improvement of
entrepreneurial framework condition. The study recommends that there should be a
strict policy framework that can enhance entrepreneurs-government partnership in
area of finance, skill development and alliance.
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
The prosperity and progress of a nation depends on the quality of its
people. Creative and innovative minded individuals backed by ability and desire
make it possible for the society to develop. Biodun in Business times (1995:35)
explains that entrepreneurial potentials can be found and developed anywhere,
irrespective of age, qualification, experience or social economic backgroundonly efforts are required in the right direction. Therefore, entrepreneurship is no
monopoly of any religion or community.
Entrepreneurship may not be regarded as the sufficient condition for the
growth and development activities, but it is surely a necessary condition. This
perhaps informs why Adeyemi (2012:2) avers that “entrepreneurship is the
livelihood of any economy”. It is in line with this position that entrepreneurship
is looked at as being imperatives for the economic development of Nigeria.
Nigeria, the most populous country in Africa, is naturally endowed with
millions and millions of acres of durable land, 38.5 bullions barrels of stated oil
reserves, vast gas reserves, a variety of unexploited minerals, and a wealth of
human capital by virtue of its estimated population of 150 million (Oteh, 2009:1).
Organization of Petroleum Exporting Countries (OPEC) has ranked Nigeria its
second biggest crude oil exporter by volume, climbing four places to push Iran
and Venezuela to the back stage and only out paced by Saudi Arabia (OPEC,
2000-2014). Nigeria accounts for 15 percent of Africa’s population, contributes
11 percent of Africa’s total output and 16 percent of its foreign reserves, while it
accounts for half of the population and more than two-third of the output of the
west African sub region (UNDP, 2000-2014).
Over the years, Nigeria has implemented far-reaching economic reforms,
aimed at improving micro and macro economic management, liberalizing
markets and trade business environment. From the era of business enterprises
promotion decree of 1973 (otherwise known as the indigenization policy) to the
present transformation agenda of the President Goodluck Jonathan administration
the potentials of entrepreneurship in the economic development have not been in
doubt. Freeman, Stoner and Gilbert (2005:161 - 164) maintain that the role of
entrepreneurship in any given society could be traced to the four basic social
benefits of the entrepreneur to the society; these include, fostering of economic
growth, enlargement of productivity, creation of new technology, product or
services and changes that rejuvenates competition.
The birth of a new business in most cases is tantamount to the creation of
fresh jobs. As that business expands, the economic activities accompanying it
expand further, thus widening the economic growth. The multiplier effect of
establishment of successful business in the economy are enormous; it provide
jobs for small families and their relations; others may also be hired. This is
probably, why economists pay good attention to entrepreneurship development.
Agbaeze (2007:35) quotes Birch David as saying- ‘‘while corroborating
above stance that more than four-fifth of all new employment opening in
America comes from small business firm.’’
Entrepreneurship also creates goods and services that are capable of
satisfying needs. The multiplicity of this creation enlarges productivity. Agbaeze
(2007:36) cites John Kendrick as informing that higher productivity is chiefly a
matter of improving production techniques and this is entrepreneurial functions
per excellence. Two keys to higher productivity are research and development (R
and D) and subsequent investment in the plant and machinery.
Furthermore, entrepreneurs are usually, thirsty for innovation and creation
in a bid to have competitive advantage over each other’s inventions, new
technologies and development. A single creation may lead to a number of other
creations and subsequently new products. In the 18th century, James Watt, in
England, developed and perfected the steam engine, in a bid to ease the
production processes in the factory (Agbaeze; 2007). To take advantage of this
intervention and remove some of the bottlenecks associated with it in the mid
1960s, James Hargreaves invented the spinning jenny, an invention linked to the
steam engine. Further in 1785, an English clergy man invented the power loom-a
weaving machine powered by the steam engine.
Agbaeze (2007:36) cites Zoltan as describing small business, created by
entrepreneurs as agents of change in the market economy. Two possible types of
technological changes associated with products/services in the market place
include quantum technological change that result into quantum product
innovation (a shift or jump from the existing product to entirely new product),
and incremental technology change - that is change that refines an existing
technology and leads to gradual improvements or refinements in products and
services overtime. In any of the cases, competition is rejuvenated. Firms are
worked up and competitions are renewed. Relay-race is investigated by changes
in innovations and counter innovations
From the forgoing, therefore, the assumption and/or hypotheses that
entrepreneurship is linked to economic growth finds it’s most immediate
foundation in simple intuition, common sense and pure economic observation:
activities to convert ideas into economic opportunities lie at the very heart of
entrepreneurship. Entrepreneurship is a source of innovation and change, and a
such spurs improvement in productivity and competitiveness (Agbaeze, 2007:36
cites Zoltan).
Friijs (2002:1-2) quotes the organization for Economic Cooperation and
Development (OECD) as opines that entrepreneurship is closely associated with
knowledge and flexibility-two factors that have gained new significance as a
source of competitiveness in an increasingly globalize world economy. Friijs
adds that the shift in the industry structure towards less concentration and more
decentralization that OECD countries experienced between the mid-1970s and
the early 1990s is only one indicator of this development. Contributing to this
view point, Jaaskelainen (2005:5) observe that with technological change and the
intensified global competition brought about by globalization and economic
liberalization, the assumption that fostering entrepreneurship means fostering a
country’s competitiveness today appears more vital than ever.
Bamkole (2007:1) in an interview with knowledge @ Wharton.com while
commenting on the subject states that:
Nigeria (Former) president Olusegun Obasanjo has
set an ambitions goal; He wants the country to
become one of the world’s top 20 economics during
the next two decades. In other to hit that target by
2020, Nigeria will need to increasingly globalize
education in two key areas. Information and
communications technology and entrepreneurship.
Infact, president Obasanjo has mandated that all
University students in Nigeria, regardless of their
major, will need to study entrepreneurship.
He further opines that:
…Entrepreneurship is a must now, judging by the
figures that are coming out of the education
ministry. In the last few years, at least 60 graduates
are not able to get employment immediately.
Because of that, people go into one entrepreneurial
venture or another, but unfortunately they have not
been adequately prepared to face the challenges of
venturing. Now it has become necessary for us to
put that into the curriculum in developing these
graduates (Bamkole, 2007:1).
From the foregoing, it is becoming increasingly clear the entrepreneurship
is the way forward in order to revamp the Nigeria Economy. But the question still
remains:
Has adequate preparation been made for potential
and budding entrepreneurs to face the challenges
of business venturing.
Hence, the main stay of this research work will be to emphasize the role of
entrepreneurship in economic development of the Chemicals and Pharmaceutical
industry Enugu State, Nigeria.
It is, therefore, striking that the importance of entrepreneurship mainly with
regard to the question of how to foster economic development seems to be
primarily imperative. Entrepreneurship is viewed as being central to the
developing countries trying to attain competitiveness and economic growth.
Though, considering the growing rate of potentiality and opportunity in
Chemicals and Pharmaceuticals industry pave ways for increase in the border or
boundary of business development and economy growth in Nigeria. The National
Economic Empowerment Development Strategies (NEEDS) and the State
Economic Empowerment Development Strategies (SEEDS) have spurred a lot of
entrepreneurial activities in Enugu State. Agricultural industries, food beverage,
tobacco industries, plastic and rubber industries, textile, wood processing
industries, chemical and pharmaceutical industries are replete in most of the
industries sites in Enugu State. These industries, apart from solving domestic,
home and healthcare need of the society, complement Government effort in the
economic development of the Enugu State. Chemicals and Pharmaceuticals
industry are business venture that engage in production and distribution of drugs,
paints, petroleum products, soap, creams, insecticides, antiseptics etc.
1.2
Statement of the Problem
Entrepreneurship is often seen as a process of creation with a view to
identifying gaps in need, and mobilizing the necessary factors of production to
close the gap(s) with a view to profiteering, if not immediately, later. By so doing
so many societal problems are solved. The above notwithstanding, in Nigeria
over half of the Nigerian’s population lives on less than a dollar a day. Nigeria is
one of the top three countries in the world that have the largest population of poor
people. In addition, Nigeria remains off track on achieving the millennium
development goals (MDGs) especially in alleviating a number of people who live
in extreme poverty through entrepreneur ideas.
The economic reforms have not been sufficient to reverse years of
economic decline, deteriorating capacity, weakened institutions and inadequate
infrastructure investment while the recent drama in stock market decline and
banking crises and the global economic crises have accentuated the situation.
The enormity of the challenge is corroborated by Nigeria’s low score on
human development index (HDI) - an index that measures the average
achievement of a country in terms of the welfare and quality of its people.
Nigeria ranks behind numerous countries with similar sized economies and with a
rank similar to smaller economies like Liberia and Malawi. Consequently
entrepreneurial development in Nigeria appears to have not performed creditable
well and hence not played the expected vital and vibrant role in the economic
growth and development of Nigeria. This situation has been of great concern to
the government, citizenry, operators and practitioners of the organized private
sector. Because of the foreseen impact the governments at various levels, through
budgetary allocations, policies and pronouncement have significant interest and
acknowledged the crucial role of the Business enterprises sub-sector of the
economy and hence made policies for energizing the same. There have also been
fiscal incentives, grants, bilateral and multilateral agencies support and aids, as
well as specialized institutions all geared towards making the SME sub-sector
vibrant. These initiatives are supposed to inspire entrepreneurial spirit for
economic development, it is therefore yet to be ascertained how entrepreneurship
has nurtured or otherwise mitigated the economic development of chemicals and
pharmaceuticals industry in Enugu State.
Inspite of all these effort, the rate of unemployment is still very high.
There is still high poverty rate, low gross national product (GNP)/Gross
Domestic Product (GDP), uneven distribution of wealth and slow pace in
industrialization. These societal problems, in the presence of entrepreneurial
driven society are worrisome and demand for urgent attention, thus this need
motivate this study.
1.3
Objectives of the Study
The objectives of the study are as listed below:
i.
To find out the significant role of entrepreneurship in economic
development of chemicals and pharmaceuticals industry in Enugu State.
ii.
To ascertain the extent that government policies have improved the
performance of entrepreneurial organization in Enugu State.
iii.
To examine the extent to which macroeconomic policies foster
entrepreneurship culture in economic development of Enugu State.
iv.
To identify the challenges of entrepreneurship in economic development
in Enugu State.
1.4
Research Questions
Based on the above objectives, the questions are posed to further guide the Study;
i.
What are the significant roles of entrepreneurship in economic
development of chemicals and pharmaceuticals industry in Enugu State?
ii.
To what extent have government policies improved the performance of
entrepreneurial organization in Enugu State?
iii.
To what extent do macroeconomic policies foster entrepreneurial culture
in economic development of Enugu State?
iv.
What are the challenges of entrepreneurial development in Enugu state?
1.5 Hypotheses
Hi:
There are positive significant roles of entrepreneurship in economic
development of chemicals and pharmaceuticals industry in Enugu State
Hi:
Government policies to an extent improve the performance of
entrepreneurial Organization in Enugu state.
Hi:
Macroeconomic policies positively foster entrepreneurial culture in
economic development of Enugu State.
Hi:
Entrepreneurship is challenged by finances in economic development of
Enugu State.
1.6
Significance of the Study
The study is significant in a number of ways:
First, it is hoped that the findings of this study would be of immense
importance to government and economic policy makers. On the government side,
the study would help government to develop and implement policies that would
foster entrepreneurial culture.
Secondly, the study would be of immense significant to the students of
management, economics/political economy and sociology. The researcher will
use this study as a source of secondary data for further studies.
Thirdly, the study is significant in that it would contribute to the growth
of literature in the area of entrepreneurial culture/entrepreneurship and it will be
very useful for all those who want to carry out research in the same area.
1.7
Scope of the Study
This study focused on the role of entrepreneurship in economic
development of the chemicals and pharmaceuticals industries in Enugu State.
Basically the study concentrated on chemicals and pharmaceuticals industries
within the Enugu Urban.
1.8
Limitations of the Study
Certain limitations encountered in the course of the study include:.
1.
Attitude of the Respondents
This study was further limited by the attitude of the respondents. Owing
to high level of ignorance, many respondents were reluctant to fill the
questionnaire and also felt indisposed to provide vital information. The
constraints notwithstanding, the researcher successfully overcame and did
a good research work.
1.9
Definition of Terms
•
Business: Is the planned activities of individuals or groups of people
aimed at producing and selling, for a profit, the goods and services that
satisfy the need of consumers.
•
Economic Development: The improvement of the individuals, society
well being, such that the GDP of such people/societies equals or greater
than the United Nations standard.
•
Economic Structure: Institutional arrangement for deciding on what,
how and for whom goods and services are to be produced.
•
Entrepreneur: An individual who coordinates other factors of production
and bears the risk of uncertainty by investing his scare resources in the
business venture.
•
Entrepreneurship: The willingness and ability of an individual to seek
out investment opportunities established and run an enterprise
successfully.
•
Environment: The environment of an organization includes those
individuals, organizations, government agencies, suppliers, distributors,
press, etc who in one way or the other help an organization to carry out its
productive activities but are not subject to the control of that organization.
•
Financial Institutions: Financial enterprises, which perform one or more
of several financial services such as accepting deposits, brokering,
securities activities, managing funds and underwriting securities.
•
Government: The organ of the state that makes interpret and enforces the
laws. It exercises legal and regulatory control over business and it’s
environment.
•
Infrastructure: Basic structures and facilities necessary for a country or
organization to function efficiently.
•
Microfinance: Providing services to the poor who are traditionally not
served by the conventional financial institutions.
•
Policies: Guides and directives that are formulated to shape the thinking,
actions and decisions of a people in a given area.
•
SME: Independently owned and operated business enterprises which are
not dominant in its field operation.
1.10
Profile of Participating Institutions
Ac Drugs Limited is a pharmaceutical company with factory office at No.
4 Acor Road, Edward Nnaji Layout, Abakpa Nike, Enugu. The company was
established in 1997 and has as its Managing Director, Pharacy Aniefom Chuzi
Igbueobi. The products of the company are: artemirin, Harivite, Ac-Clox,
Acimox etc.
Hardis and Dromedals Ltd :was established in 1986 and has her factory
offices at Hardis Industrial Estate, Airport Road, Emene and Kilometer 9
Enugu/Ontisha Expressay, Umunya, Oyi L.G.A. The name of the company’s
Managing Director is Dr. Chike Obidigbo.
The company’s products are
germicides, cosmetics, soap, plastics and the notable brands are Isol, Royallux,
Akacha and Divitol.
Integrated Chemical Industires (INTECIL) Ltd: was established in 1994
by Chief Christ Arodiogbu (Managing Director). The factory office is Plot 137
Emene Industrial Layout while the corporate office is No. 16 Isuochi Street,
Uwani, Enugu. Her products are resins and chemicals with notable grand as
Intercil.
Juhel Nigeria Ltd: was established in 1987 by Ifeanyi Okoye. The factory
address as 35, Nkwubor Road, Emene – Enugu.
The company is a
pharmaceutical company with notable brands as vasopria, ivy etc. The Managing
Director is Pharm. Amaka Okoye.
Nalin Paints Limited: is located at Thinkers Corner, Emene, Enugu and
was established in 1994. The company produces Nalin Paint. The company’s
Managing Director is Chief J.U. Arodiogbu.
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Developing Country’’. Ilorin: Department of Business Administration,
University of Ilorin.
Agbaeze, E. K. (2007), Development of Entrepreneurship - the Nigerian
Perspective. Enugu: Precision Publisher.
Armstrong, N. (2008), “Uis Data UNESCO: www.unesco.net.org
Bamkole, R . (2007), “The Entrepreneurship Challenge in Nigeria,
Knowledge @ Wharton”. Wharton
School, University of Pennsylvaria Available at
([email protected])
Biodun, A. (1995), “Structural Adjustment Programme and Economic Growth”
Lagos: Business Times, Publishing Co. Ltd, April, 12th.
Freeman, R.E., Gilbert, D. R. and Stone, J.A.E. (2005), Management , India Baba
Barka North Printers.
Friijs, C, Thomas, Paulsson, and Karlsson, C. (2002), Entrepreneurship and
economic Growth - A Critical Review of Empirical and Theoretical
Research. Ostersound, Sweden: Instituted for Tillvaxtpolitiska Studier.
Gilberth, H. (2005), The Entrepreneur in Microeconomic Theory Disappearance
and Explanation, London: Routledge.
Oteh, A. (2009), “The Role of Entrepreneushlp in Transforming the Nigerian
economy” Okada, Edo State: Igbinedion University retrieved from
http.//uokada-edu.ng/news Convocation Lecture.
Uwadiegbu, J.T (2009), “Human Development Index Report”, UNDP: Available
at www.unesco.net.org
Waliz, N.J. (2008), “World Health Statistics” WHO: www.who.net.org
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1
Introduction
This chapter reviews the work of past scholars and authors relevant to this
research work titled “The role of entrepreneurship in the economic development
of the chemicals and pharmaceuticals industry in Enugu state, Nigeria.
For the purposes of this study, the literature is reviewed along the major
headings- conceptual framework, theoretical framework of the study, empirical
review, chemicals and pharmaceuticals industry in Enugu and summary of related
literature.
2.2
Conceptual Framework
2.2.1 Entrepreneurship – A Conceptual and an Historical Overview
The concept of entrepreneurship is nebulous and many academic
disciplines have contributed their perspectives on the concept of entrepreneurship
including psychology (Shaver and Scott, 1991), sociology (Thorton, 1999),
economics (Schumpeter, 1934 and 1949) and management (Stevenson, 1985). An
economist views entrepreneurship in the context of the combination of resources,
labour, materials, and other assets such that their value is greater together than
individually. From a management perspective, entrepreneurship would entail the
introduction of a change, an innovation or a new order. To a psychologist, an
entrepreneur would be analyzed as a person typically driven by the need to obtain
or attain a specific goal, to experiment, to accomplish or perhaps to escape the
authority of others.
There is, therefore, very little consensus on the definition of the term,
entrepreneur both within and across disciplines. Wennekers and Thunik (1999)
highlight qualities of entrepreneur such as competitiveness, creativity and the
ability to grow a business.
Historically, entrepreneurial development and its creative response to
need have often been attributed to the enterprise of a minority group (Agbaeze
(2007:13). Notable among these are Marcopolo in the far East, the Chinese in
South-East Asia, the Leventis in West Africa, the Ibos in Eastern Nigeria, Asians
in East Africa, Parses in India, Sumarai in nineteenth century, Japan and the nonconformist (specially the Quakers) in seventeenth Century England Napoleon at a
point castigated England as a nation of “shopkeepers” These people did not share
common race or benefits that predispose them to entrepreneurial spirit. However,
they were minorities and their feelings of insecurity and denial to traditional route
to prestige and honour appears to have motivated them to seek economic
emancipation through innovation and creative responses to gaps on need among
various segments of the society (Elkan, 1988:171-188, Uzoma, 1991:3).
Table 2.2.1:
Development of Entrepreneurship Theory and Term,
Entrepreneur
Stems from
Means between Taker or Go-between
Middle Ages
Actor and person in charge of large scale production projects
17 century
Person bearing risks of profit (loss) in a fixed price contract with government
1725
Richard Gantillion – Person bearing risk is different from one who is supplying
capital
1803
Jean Baptiste Say- separated profits of an entrepreneur from profits of capital
1876
Francis Walker-distinguished between those who supplied funds and received
interest and those who receive profit from managerial capacities
1934
Joseph Schumpeter-entrepreneur is an innovator and develops untried
technology
1961
David McClelland-entrepreneur is an energetic, moderate risk taker
1964
Peter Drucker-entrepreneur maximizes opportunity
1975
Albert Shapero-entrepreneur takes initiative, organizes social and economic
mechanisms and accepts risk of failure
1980
Karl Vesper – entrepreneur seen differently by economists, psychologists,
business persons and politicians
1983
Gifford Pinchot – Intrapreneur is an entrepreneur within an already established
organization.
1985
Robert Hisrich – entrepreneurship is the process of crating something different
with value by devoting the necessary time and effort, assuming the
accompanying financial, psychological and social risks, and receiving the
resulting rewards of monetary and personal satisfaction.
Source:
Hisrich, R.D. (1998) “Entrepreneurship And Intrapreneurship
Methods for Creating New companies that have an Impact on
Economic of an Area”, in Entrepreneurship. Intrapreneurship and
Venture Capital. Robert D. Hisrich (ed) (Lexington Books, 1980)
p.96 see also Robert D. Hisrich (ed) (Lexington Books, 1980) p.96
see also Robert D. Hisrich and Michael p. Peters
“Entrepreneurship” p6-9.
Management scholars are of the view that the term, entrepreneurship did
not begin with Max Weber and Joseph Schumpeter. Its beginning is traceable to
Marco Polo.It attracted, however interest and emphasis in the 1940’s. The above
table, adapted from Hizrich (1998:6-9) show a summary of this development.
Hisrich and Peter (1998:7-8) further classify the development into five
periods – the earliest period, the middle ages, the 17th century, the 18th century,
the 19th and 20th century. In the earliest period, the entrepreneur was, primarily, a
go-between a linkage between the producer and the consumer. For instance is
Marco Polo, who established trade routes between America and the Far East. As
a go-between, Marco Polo would sign a contract with a producer to seed his
goods, a venture capitalist would finance the contract including the insurance.
The capitalist becomes a passive risk bearer, the penchant adventure took active
role in trading, bearing all the physical and emotional risks. When the merchant
adventurer successfully sells the goods and completes the trip, the profits arising
from the venture is divided between the merchant adventurer and the capitalists;
most of the time 75% to the capitalist and 25% to the merchant adventurer.
In the middle ages the corrupt was used in describing both an actor and a person
in charge of large scale government projects. Such an individual bears no risk. He
is merely in charge of government architectural works like castles and
fortifications, public buildings, abbeys and cathedrals. A typical entrepreneur at
this period is the cleric.
Agbaeze (2006:7-16) opines that the entrepreneur was first seen as a risk
bearer in the 17th century, adding that
“At this period, entrepreneurs entered into contractual obligations
with the government to provide services or supply certain products
at a contractual rate. After execution of the contract, the resulting
profit or loss, as the case may be, became that of such an
entrepreneur”.
One notable contractor/entrepreneur at this time was the Frenchman –
John Law of the Mississippi Company. This company eventually failed when law
attempted to push the company’s stock price higher than the value its assets.
Richard Contillion, in Benson, (1993) an economist and author in the
1700s after under-studying Law’s business, developed one of the earliest theories
of entrepreneurship - the theory of the entrepreneur as a risk bearer. He observed
that Merchants buy at certain price and sell at an uncertain price, therefore,
operating at a risk (Benson, 1993:140-146). For this reason, Richard Cantillion
was regarded, by some, as the originator of the term.
The 18th century witnesses industrialization in most parts of the world.
Most of the investors had no money to finance their inventions. The entrepreneur
in this changing world situation, besides being a risk taker was further
differentiated from the capitalist. The entrepreneur was then seen as an inventor
not a capitalist. A venture capitalist is referred to as a professional money
manager who makes risk investments from to pool of equity capital to obtain a
higher rate of return on the capital investment. Reward for the capital is interest
while the entrepreneur gets profit.
In the later part of the 19th century and early 2oth century the
entrepreneur was seen from economic viewpoint. He was not very distinguishable
from a manager. Bird, Hayward and Allen (1993:57-77) write that:
“The entrepreneur organizes and operates an enterprise for
personal gain. He pays current prices for materials consumed in
the business, for the personal services he employs and for the
capital he requires. He contributes his own initiative, skill and
ingenuity in planning, organizing and administering the
enterprise. He, also, assumes the chance of loss and gain
consequent to unforeseen and uncontrollable circumstances”
Agbaeze (2007:17) gives example of this definition as Chief Elechi D.
Ikoro and Andrew Carnegie adding that both invented nothing but created wealth
through adoption and development of new technologies. Carnegie, who
descended from poor Scottish family, invented nothing, but through unremitting
competitiveness made the American steel industry one of the wonders of the
industrial world. Ikoro of Ikorotex Nigeria plc also invented nothing rather
through adequate environmental seaming and calculated mass importation of
textile materials contributed in no small measure in turning Aba into a major
textile market in Nigeria.
The notion of an entrepreneur as an investor was established in the middle
part of the 20th century. His major function, within this period, was seem as
revolutionizing the pattern of production through exploitation of inventions or an
untried technological possibility for production of new goods or an old one in a
new way, sourcing supply or outlet for products by reorganizing a new industry
(Schumpeter, 1952:72). This definition introduces the concept of innovation and
newness as integral part of the definition of entrepreneurship.
From the foregoing discussion, Adeyemi (2002:2) cites Schumpeter
(1959) as stating that entrepreneurship is the “carrying out of new combination
we call enterprise” adding that the individuals whose function is to carry them out
were call entrepreneurs. Drucker (1993) describes the entrepreneur as a person
who is willing to risk his capital and other resources in new business venture
from which he expects substantial rewards, if not immediately, then in the
foresable future.
Okpara (2000:3-4) perceives the entrepreneur as an individual who has
the zeal and ability to find and evaluate opportunities, observing that they are
calculated risk-taker, who enjoy the excitement of challenges, not necessarily
gambles.
Indeed, three of the most frequently mentioned functional roles of
entrepreneur are associated with major schools of thought on entrepreneurship:
•
Risk seeking: the cantillion or knightian entrepreneur willing to take the
risk associated with uncertainty;
•
Innovativeness:
the
Schumpeterian
entrepreneur
accelerating
the
generation, dissemination and application of innovative ideas;
•
Opportunity seeking: the kiznerian entrepreneur perceiving and seizing
new profit opportunities OECD, 1998:11; Carree and Thurick, 2002:8).
One operational definition of entrepreneurship that successfully
synthesizes the functional roles is that of Wennekers and Thurik (1999:46-47):
The manifest ability and willingness of individuals, on their own,
in terms within and outside existing organizations, to perceive and
create new economic opportunities (new product, new production
methods, new organizational schemes and new product-marked
combination) and to introduce their ideas in the market in the face
of uncertainty and other obstacles by making decisions on
location, form and the use of resources and institutions.
After diagnosing the above except, Carree and Thurik (2002:4-5)
conclude that entrepreneurship is, hence, essentially a behavioural characteristics
of a person, adding that entrepreneurship may exhibit it only during a certain
phase of their career or only with regard to certain activities.
Ikpo, Passi, and Mikko (2004:13) aver that an entrepreneur is a person
while entrepreneurship is the process of its actual working, adding that
entrepreneurship is also consistently equated with the establishment and
management of small business enterprises. Of particular importance, in the
context of Nigeria, is the concept of social entrepreneurship as applying
commercial practices to social problems and social entrepreneurs as
entrepreneurs that use business skills and knowledge to create enterprises that
accomplish social purposes, in addition to being commercially viable (Emerson
and Twerksy, 1996). Others define the concept as a mechanism for fostering
innovation within the context of the myriad of social problems that are fare and
focus more attention on the innovative arrangements that
resolve social
problems, rather than economic viability (Gregory, 1998). A third definition sees
social entrepreneurship as a vehicle for engendering social transformation beyond
the solution of the social problems as initially conceived.
Unlike traditional business entrepreneurs, social entrepreneurs have a
social mission and primarily seek to generate social value neither profit. They are
individuals who have the potential to transform people’s lives, with innovative
solutions to society’s most pressing social problems.
Social entrepreneurs act as a change agent for society, seizing
opportunities others miss in order to improve systems, invent and disseminate
new approaches and advance sustainable solutions that create social value. The
entrepreneurial landscape, (both the social and business) contains a diverse group
of enterprises that cut across the small, self employed craftsman to the
innovative, high-tech oriented growth companies, with the ardent social
entrepreneur in between.
2.2.2 Chemicals and Pharmeuticals Industry in Enugu State - A Cursory
look
Enugu State occupies a surface area of about 8,000 sq.km within the
West Africa tropical region. It is bound in the East by Ebony State, in the West
by Anambra, in the North by Kogi and in the South by Abia (SEED,2009).The
State is ethnically homogenous, with majority of the inhabitant being of Igbo
origin. The State has 17 local Government area.
Following the pursuit for achievement of the millenium development
goal (MDG), objectives, the Federal Government of Nigeria strategically
developed the National Economic Empowerment Development Strategies
(NEEDS) as a work plan. Subsequently, all the state of the Federation developed
their own work plan through the State Economic Empowerment Development
Strategy (SEEDS).
In Enugu State the SEEDS strategy has five strategic objectives, which
include the support entrepreneurship and self help efforts; improve delivery of
basic social services; improve basic infrastructure; ensure sustainability of the
environment and natural resources, and create an investment friendly
environments. The strategic framework in diagrammatically represented in the
table below.
Figure 2.2.1 Strategic Framework of the PRS
Source: SEEDS/PRS (2004 – 2009). Enugu State Government of Nigeria.
http//www.academia.edu/3409754/research.
Under the support for entrepreneurship and self-help effort, the targets
were to: increase average household income by 300%; reduce unemployment and
underemployment to 3% and 5% respectively; increase incomes of by 400% and
increase incomes of women by 400%; enhance viability of SMEs and micro
enterprises; support managerial technical capacity building for SME and micro
enterprises; promote formation of cooperative societies; facilitate access to
capital from private sector, and international development agencies among others.
These strategic plans yield at results as there are a lot of small and medium scale
enterprises in Enugu State, which engage in food, beverage and tobacco,
domestic and industrial plastics, textile industries, wood and wood processing
industries, basic metal and iron industry and chemicals and pharmaceuticals
industry. From the
record of the Small and Medium Scale Enterprises
membership, the following eighteen (18) Chemicals and Pharmaceuticals
Industry operate in Enugu State. (see Appendix 1V ) AC drugs ltd, Bulger
pharmaceutical ltd, Ceenek pharmaceutical, Cinnamons drugs ltd,
Clark
pharmaceutical ltd, Dezem Nigeria ltd, Emy Holding Nigeria ltd, Gloria-Glory
pharmaceutical ltd, Hardis and Dromedas ltd, Intergrated Chemical Industry ltd,
Juhel Nigeria ltd, Michelle Laboratories ltd, Nalin Paint ltd, Nemel
pharmaceuticals Nigeria ltd, Rugal pharmaceutical ltd, Sharon paint and chemical
Nigeria ltd, Sidon pharmaceutical Itd and Vadis ltd. These chemicals and
pharmaceuticals industry engage in production and distribution of wide range of
health and home care products.
The nature of entrepreneurship in Enugu State will be examined in terms
of size and capital employed. Eze (1997) opines that entrepreneurship
development in Enugu in recent years featured the springing up of large number
of business enterprises that are peculiar in terms of the level of capitals and
number of workers employed as well as the level of technology. Okafor (2000)
opines that business in Enugu State are prove to small scale operation and are
characterized by localized market for their product, initial capital investment and
reliance on very easily adaptable process technology.
2.2.3 Requirements for Successful Entrepreneurship
Some of the basic prerequisites that make for a successful Entrepreneurship
venturing would be broken down into:
a)
Personal characteristics of successful business owners;
b)
Practical business tips for success; and
c)
Small business and organizing for success
a)
Personal Characteristics of Successful Small Business Owners
Broom and Longnecker (1986), reiterate that entrepreneurship poses a lot of
challenges and as such, requires certain attributes on the part of the small
business owner to succeed. Notable amongst these personal characteristics
are:- (cited in Dickson (1974:4)
i)
Drive
The small business owner must possess on insatiable drive for
accomplishment, an inner compulsion and passion to work and to
succeed. Broom and Longnecker (1986), emphasized this point
when they said that this requires single mindedness and an obstinate
refusal to give up even when the situation looks impossible. It
necessitates energy, aggressive, initiative, ambition and even an
unashamed desire to make money and be a real success.
ii)
Mental Ability
Good business decisions make for entrepreneurial success. But good
business decisions are products of intelligence, creative thinking
ability and analytical thinking ability. Hence the small business
owner needs a high mental ability to thrive.
iii)
Human Relations Ability
The entrepreneur who maintains good human relations with
customers, employees, suppliers, creditors, and the community is
much more likely to succeed in his business than one who does not.
iv)
Communications Ability
This connotes that ability to communicate effectively in both oral
and written communications. It also involves ability to disseminate
information in an understandable form and at the right time, thereby
eliminating confusion and delay in decision making.
v)
Ability to Delegate Responsibility
When a small business owner delegates responsibilities effectively
work gets done faster, easier and at less cost. It also helps him to
avoid using a fire brigade approach to tasks because jobs are already
planned ahead and adequate measures taken to address emergencies.
This also frees the Entrepreneur to think ahead and visualize work
situation, formulate objectives and general plans of action; and
communicate these plans to his subordinates.
vi)
Integrity and Sincerity
These include trustworthiness, loyalty and ability to maintain a
reputation of one who is honest and fair in dealing with others. Note,
however, that if a business person lacks integrity, his business will
lack credibility.
vii)
Ability to Accept Responsibility
This implies the ability to take decision, accept the decisions and its
implications in oneself and one's staff.
viii)
Emotional Maturity
This involves the practice of self-discipline, and self control and the
ability to analyze a situation without prejudice.
ix)
Tolerance of Risk
Successful entrepreneurs have high need achievement and as such,
like to take calculated risks. This stimulates them to greater effort.
x)
Self-Confidence
This is the ability to have strong belief in one's power to succeed in
solving problems and dealing with difficult situations.
Other personal characteristics include:
b)
•
Innovative/initiative
•
Persistent enthusiasm
•
Adaptability
•
Judgment, etc
Practical Business Tips for Success
Onuoha (1994), advises entrepreneurs to avoid the following
common mistakes:
i)
Hiring Cheap Labour
The fact that cheap labour automatically leads to a lower wage bill,
does not necessarily lead to higher profits. In fact, according to
Ovourie (1990), cheap labour has a tendency of producing poor
quality products which can lead to losses;
ii)
Failure to identify propitious niches or target market(s) for the
marketing of their products;
iii)
Wrong application of money
iv)
Over-staffing
Using employment as philanthropy.
v)
Excessive Socializing
Some claim that joining many societies and clubs help in making the
right contacts and connections; forgetting that such membership
goes with serious financial and time commitments.
c)
Small Business and Organizing for Success
Ezeh (1999:78), identified various steps one must take in order to
arrive at entrepreneurial success. This is illustrated and summarize in
figure below:
Figure 2.1.2: Entrepreneurial Success Tree
Success
Take responsibility
for success of failure
Develop relationships with
customers, employees,
suppliers etc
Work hard with sense of urgency
Plan, organize and follow through
Be willing to risk time and money
Have a business goal or vision
Source: Ezeh, J.A. (1999), Fundamentals of Small Business Management,
Enugu: Glanic Venture.
2.3
Theoretical Framework
This study is anchored on the need for achievement motivation [N.ACH]
and Thomas Cochran’s Sociological Theory of Entrepreneurship (2002) and also
the study was anchored on the Wenneker and Thurik and GEM (2002) conceptual
models. The need for achievement motivation theory was propounded by David
McClelland (1961). It is, probably the best known work association with traits
and psychological. The theory concludes that those who have high need for
achievement have a high probability of getting into business and succeeding.
Ibrahim and Ellis (1990:19) these classes of people are also having high
probability of benefiting from business training courses.
The second theoretical assumption underlying the study Cochran’s
Sociological Theory of Entrepreneurship the variables in this theory are cultural
values, role expectations and social sanction in the views of Okpara
(2000:21).Theory holds that the environment in which an individual is reared
determines his entrepreneurial urge. This theory of entrepreneurship perceives the
entrepreneur as being the representation of his society’s model of personality
.Cochran opines that the individual performance as an entrepreneur is influence
by three factors, namely:
i.
The individual’s attitudes towards his occupation;
ii.
The role expectations held by the society (the sanctioning group\role
moderator);
iii.
The operational requirement of the job.
Social values and norms are perceived as the most important determinants
of the first factors. It further implies that change over time in such exogenous
factors as technology, population and entrepreneurs are motivated by the need for
achievement in their institutional drift will impinge on the role structure created
by creating new operational needs. The entrepreneurs’ reaction to such change,
whether it will be that of aggressive innovation or creativity or acts of inertia or
inactivity, will be determined primarily by the socio-cultural values and norms.
Thomas Cochran, just like David McClelland, in this theory, concludes
that good and successful entrepreneurs are reared from their youth through such
factors as culture, norms, and social sanctions Okpara (2000).
Agbaeze (2007:39) explains that McClelland opines that most
entrepreneurs are motivated by the need for achievement in their entrepreneurial
pursuit, adding:
…The inculcation of achievement motive in a
child in his early stage of development is Capable
of
influencing
him
towards
acts
of
Entrepreneurship.
Agbaeze (2007:39-40) explains further that McClelland illustrated the
above assumption by the training pattern of Jewish children who, from birth, are
taught to be on top in all pursuit in order to counteract the strict attitude of the
society towards them. This makes them to see themselves, from birth, as people
who must be pace setters and excellent in any area of endeavor they might find
themselves. As a result most of them end up with acts of entrepreneurship.
The work concludes that the characteristics-trait-associated with
entrepreneurs include: high need for achievement, risk taking propensity,
tolerance of ambiguity-society, it is positive and challenging, creativity or
mechanism for creating or increasing wealth; purposeful creation; change focus
that yield dividends, intuitive, flexibility, high need for independence and
autonomy, self confidence, internal locus of control, adapting readily to change,
dominance, low need for conformity.
A critical analysis and/or examination of the above theories will reveal
that they are suitable for this story. In the first place, there is a yearning need for
development which the Nigerian people have appreciated. This gap informed the
indigenization policy – which endeavors to not only make them egalitarian and
enterprising.
On the second hand, we anchored these models. The two models which
have succeeded in not restricting explanations for economic growths to the realm
of macroeconomics are proposed by Wennekers and Thuricks (1999) and the
Global Entrepreneurship monitor (GEM) research programme. UNCTD (2005:6)
informs that Wennekers and Thuricks (1999) established that the following
models, relating entrepreneurial activity to economic growth:
Fig 2.3.1: The Wenneker and Thurik model
Level of Analysis
Individual level
Conditions for
Entrepreneurship
Psychological
endowment
Firm level
Culture institutions
Business culture
Macro level
Crucial elements of
Entrepreneurship
Impact of
Entrepreneurship
Attitudes skills
ACTIONS
Self-realization
personal wealth
Start-ups entry
into new markets
innovations
Firm performance
Culture institution
Variety
competition
selection
Competitiveness
Economic Growth
Source: Carree and Thuricks (2002:20) The Impact of Entrepreneurship on
Economic Growth, In Zoltan, ALS and David B Audretsch (2003)
InterntionalHandbook of Entrepreneurial Research. Boston/Audretsch: Kluwer
Academic Publishers.
The model distinguishes between three levels of analysis-the individual
level, the firm level and the macro level. Entrepreneurial activities originate at the
individual level and are always traceable to a single person- the entrepreneur.
Entrepreneurship is, hence, induced by an individual’s attitudes or motives, skills
and psychology endowment. Yet, the individual entrepreneur is not undertaken
entrepreneurial activities in a timeless and space less vacuum, but is affected by
the context in which he or she is acting. Therefore, entrepreneurial motives and
actions are influenced by cultural and institutional factors, the business
environment and macroeconomics conditions.
While entrepreneurship originates at the individual level, realization is
achieved at the firm level. Start –ups or innovations are vehicles for transforming
personal entrepreneurial qualities and ambitions into actions. At the macro level
of industries and national economies, the sum of entrepreneurial activities,
constitutes a mosaic of competing experiments, new ideas and initiatives. This
competition leads to variety and change in the market-that is a selection of the
most viable firms, their imitation and a displacement of obsolete firms
entrepreneurial activities hence expands and transforms the productive potential
of the national economy by inducing higher productivity and an expansion of
new niches and industries. Processes at the aggregate level are in turn, linked to
the individual layer, obviously important feedback mechanisms for individual
entrepreneurs. Entrepreneurs can learn from both their own and others, successes
and failures, which enables them to improve their skills and adapt their attitudes.
(Carree and Thurick, 2002: 19-20)
The conceptual framework of Global Entrepreneurship Monitor (GEM),
recording to the UNCTD (2005:7) takes a slightly different angle. It analyses the
success of large firms advancing market opportunities for small and medium
enterprises (SMEs) and the role of entrepreneurship in the enterprise
creation/growth process as the main mechanisms driving macro- economic
growth along with their complementary nature.
Fig 2.3.2: The GEM Conceptual model
•
•
•
•
•
•
•
•
General national framework
conditions
Openness (external trade)
Government (extent, role)
Financial markets (efficiency)
Technology and R & D (level,
intensity
Infrastructure (physical)
Management (skills)
Labour markets (flexible)
Institutions (unbiased, rule of
law)
Major established
firms
Micro, small and
medium firms
National
economic
growth
(GDO. Jobs)
Social, cultural and
political context
•
•
•
•
•
Entrepreneurial framework
conditions
Financial
Government policies
Government programmes
Education and training
R & D transfer
•
Commercial and legal infrastructure
• Internal market openness
• Access to physical infrastructure
• Cultural and social norms
Entrepreneurial
opportunities
Entrepreneurial
capacity
• Skills
• Motivation
Creation and
closure of
enterprises
Source: Adapted from Reynolds et al (2002): “Global Economic Monitor
(GEM)-Executive Report, Wellesley, MA/London Babson college:
London Business School.
The top portion of fig 2.3.2 focuses on the role of large established
enterprises. Depending on the national framework conditionals, large firms,
generally integrated international trade markets, can promote self-expansion and
maturity. The economic success of large enterprises tends to create new market
opportunities for SMES in supplier networks, and so forth.
Yet, whether domestic firms are able to seize these opportunities depend
largely on the existence of a competitive and vibrant SME sector. The lower
portion of figure 2.3.2 highlights the second mechanism driving economic
growth: the role of entrepreneurship in the creation of growth of firms. The
entrepreneurial process occurs in the context of a set of framework conditions. It
further depends on the emergence and presence of market opportunities and the
capacity, motivation and skills of individuals to establish firms in pursuit of these
opportunities. While the success of large established enterprises tends to create
profit opportunities for small and new firms, these firms can also affect the
success of large enterprises. For instance, by being competitive and reliable
suppliers, SMEs provide a competitive advantage for large firms in global arenas
{Renolds, 2002: 40– 41}
The above two conceptual models refer to the importance of the
individual level –that is, the attitudes, skills and actions of individual
entrepreneurs. This indicates that policies for bolstering entrepreneurial capacity
should not focus solely on macroeconomic conditions or access to finance, the
most frequently used policy tools to promote entrepreneurship. Although such
policies are doubtless, important for broadening the base of individuals with
incentives to start up a business and with access to the necessary means, these
policies alone will not suffice. Rather, the founding and development of firm s
depend to a large extent on the entrepreneurial qualities of individual
entrepreneur, an issue stressed by the leading British economist, Marshall
(1989:54).
Individuals are, by and large, widely recognized as the primary agents of
entrepreneurial activities. Since the origin of any innovation, start-up or
entrepreneurial decision is traceable to single person, one approach to fostering
entrepreneurship for economic growth is to strengthen the entrepreneurial traits
of individuals. And this strengthens the bases for anchoring this study on David
McClelland’s theory- a theory that analyzed the concept of entrepreneurship from
a psychological point of view.
2.4
Empirical Review
2.4.1 Entrepreneurship
and
Economic
Development-An
Empirical
Approach
For many developing countries, entrepreneurship has been a powerful
engine of economic growth and wealth creation, and is crucial for improving the
quality, number and variety of employment opportunities for the poor. It has
several multiplier effects on the economy, spars innovation, and fosters
investment in people, which is a better source of competitive advantage than
other natural resources, which can be depleted. Entrepreneurs create new
enterprises, new commercial activities and new economic sectors. They generate
jobs for others; they produce goods and services for society, they introduce new
technologies and improve or lower cost outputs; and they earn foreign exchange
through export expansion or the substitution of imports.
Peretto (1999:389-417) opines that there are various strands in the
empirical literature on entrepreneurship and economic growth using different
measures of economic activity. For instance, while one strand of empirical
studies measures entrepreneurship in terms of the relative share of economic
activity accounted for by small firms, other studies use data on self-employment,
the number of market participants (competition) or firm start-up as an indicator of
entrepreneurial activities
Tha (1989:109) argues that entrepreneurship has been a major factor in
the economic growth of the west the USSR and of Japan in Asia, adding that it
was undoubtedly of innovating and imitating type which made the process of
development smooth and fast.
Together with recent studies on organization for Economic Cooperation
and Development (OECD) countries (OECD, 1998), the analyses of the Global
entrepreneurship Monitor (GEM) represent one of the most important sources for
statistical analysis of the links between entrepreneurial activity and economic
growth. The GEM, according to Reynolds (2000), is a research programme
launched in 1999, which provides annual assessments of the national level of
entrepreneurship, adding:
GEM analyses are based on a harmonized assessment of the
national entrepreneurial activity for all participating
countries and represent one of the rare sources of data on
entrepreneurship conducive to cross-country comparison.
The GEM measures national entrepreneurial activity as the
share of people among a country’s labour force who are
either actively involved starting a new venture and/or
manage a business less than 42 month old.
GEM (2008) conducted an entrepreneurship and economic growth study
on 48 countries in 2008 and informed:
The economic growth of a country is directly corrected to its
level of entrepreneurial activity. In particular, there is a high
correlation between economic growth and entrepreneurial
activity in industrialized countries.
The veracity of the above information lies in the fact that the American
economy is well known for its flexibility, adaptability, and grasping of
opportunity party because of the prevalence of entrepreneurial culture in the
united state. According to the GEM (2008) report countries that are able to
replenish the stock of businesses and jobs and have the capacity to accommodate
volatility and turbulence and the entrepreneurial sector are best placed to compete
effectively. Entrepreneurs therefore play a key role in addressing poverty through
their contributions to economic advancement and social employment.
The above statement shows that the national level of entrepreneurial
activity has a statistically significant association with subsequent economic
growth. This is supported by variety of other empirical studies using different
indicators of entrepreneurial activity. For instance ever before the GEM studies,
Nickel (1996), Nickell, Nicolitsas, and Dryden (1997) examine the effect of
market competition, measured as an increase in the number of competitions in
relation to development companies’ productivity performance. They report that
an increase in the number of competitions is a possible measure of
entrepreneurship since the introduction of a new product or the start-up of a new
firm is an entrepreneurial act. Using data from 600 UK manufacturing firms from
the period (1972-86 and 1982-94). The authors find evidence that competition or
an increase in the number of competitions has a positive impact on total factor
productivity growth (Nickell, 1996:741, Nickell, Nicolitsas and Dryden, 1997).
Caree and Thurik (1998), who examine how the share of small firms
affect subsequent industry output growth, have likewise established positive
effects between this measure of entrepreneurship and growth. Basing their study
on a sample of 14 manufacturing industries in 13 European countries, the authors
investigated whether or not a higher share of small businesses at the beginning of
the 1990s led to higher output growth in subsequent years in European
manufacturing. The results of their study indicate that industries with a higher
share of small enterprises relative to the same industries in other countries
performed better in terms of output growth during the subsequent 3-4yreas
(Carree and Thurik, 1998:144).
This evidence suggests an increase in the importance of entrepreneurship
as a feature of the economy, often referred to as the transformation from a
“managed” to an “entrepreneurial” economy
(Thurik and Wennekers, 2001:3; Friijs 2002:11). The transformation to an
“entrepreneurial economy” occurred between the mid 1970s and early 1990s and
became evident in a change in industry structure shifting economic activity away
from large enterprises to smaller entities, in particular to small and medium
enterprises (SMEs)
However, Dutz, Ordover and Willing (2000) remark that the relationship
between policy and entrepreneurial activity vary across countries adding:
In the context of the relationship between entrepreneurship and
economic development in low-income countries, two policies are
critical for promoting growth. First to arrest the diversion of
entrepreneurial talent towards non productive activities, an
increased emphasis on preserving rewards from productive
innovation is needed through the protection of commercial
freedom, property rights and enforceable contracts. Local inputs
are vulnerable to monopolization fostering opportunities for
grassroots’ entrepreneurship is paramount through an active
supply-side competition policy emphasizing access to essential
business services and other required local inputs.
The above stances corroborate the emphases on the development of SMEs
in low-income countries like Nigeria. Audretsch and Thurik (2001:6-11), Carree
and Thurik (2002:7-8) opine that smaller business entities appear to be better
suited to cope with the conditions of increased globalization, since they show
higher flexibility and propensity to innovation and are an outstanding vehicle for
channeling the entrepreneurial ambition of individuals. In addition, somebody
made that statement. OECD (1998:35) avers that the outsourcing strategies of
large established forms go hand to hand with a new emphasis on
‘‘intrapreneurship’’
(entrepreneurial behaviour within an existing company),
which is considered essential to competitive success. The increasing importance
of entrepreneurship as a result of these developments is best expressed in the
words of Michael Porter (1990:125): “invention and entrepreneurship are at the
heart of national advantage”.
It is in appreciation of the increasing importance of entrepreneurship for
economic development that entrepreneurship technology (EMRETEC) was
established in 1988, to promote entrepreneurship in developing countries
(EDECU, 2002:3), EMRETEC (2004) is an integrated capacity building
programme of UNCTAD that helps foster entrepreneurial and the growth of
internationally competitive SMEs. The programme was developed in response to
field research that highlighted the importance of the behaviour and performance
of the individual entrepreneur. This evidence showed that a programme was
needed that not only focused its interventions on the technical and managerial
aspects of small enterprises but also developed mechanisms that would
strengthen entrepreneurial traits. In general terms, the programmes identify
promising entrepreneurs, provide them with training aimed at strengthening their
entrepreneurial behaviour and business skills; assist them in assessing business
services and finances for their business ventures; help to arrange mutually
beneficial links with larger national and foreign companies; and put in place
long-term support systems to facilitate the growth and internationalization of
their ventures. The programme emphasizes the building of active networking
between public institutions private business associations and multilateral
organizations, as well as between natural EMRETEC programmes and other
programmes promoting entrepreneurship at regional level. Since EMRETE
inception, programmes have been initiated in 27 countries (plus 26 National
centres in Brazil), assisting more than 80,000 entrepreneurs through local marketdriven business support centres.
EBECU (2002:3) reports that the main component of the EMRETEC
programme is ubiquitous – the behavioural approach to entrepreneurship adding
that:
This approach consists of 10 personal entrepreneurial
competencies (PECs) developed by Harvard University. The PECs
are exercised through the central activity of the project:
entrepreneurship training workshop (ETW).
The ETW focuses on motivation and on strengthening entrepreneurial
talents, not on traditional business skills. A careful selection process is conducted
through focused interviews, and selected candidates undergo a two – week
workshop in which their strengths and weaknesses are identified. The success of
the programme is neither abstract nor nominal, as direct feedback and written
evaluations indicate that, as a result of the workshop more than 80% of the
participants experience a marked change in personal and business attitudes. Such
training creates workshop bonds that are instrumental in business growth, and in
buildings a critical base of competent, committed entrepreneurs, who become the
driving force of the project and ensure the successful implementation of its
subsequent stages. Follow-up support to empretecos (EMPRETEC workshop
participants) is provided through in-house advice and for training workshops on,
among other things, change management, marketing, quality control, productivity
improvement, accounting practices, financial management and negotiating joint
ventures.
EMPRETEC offers a radical commitment to strengthening SMEs in
developing countries. The EMPRETEC strategy has produced enviable results
through its 17 years of operation. An increase in the number of entrepreneurs in
developing countries provides the impetus for a vigorous developmental
process. This, in turn, generates a dynamic business environment, assuring
sustainable sources of new employment and better conditions for integrating
countries into the global market. A number of indicators of the performance of
small firms run by empretecos such as the creation of new SMEs, their survival
rate and sales increases (including export sales), indicate the effectiveness of
the EMPRETEC methodology.
An interesting example indicating the success of the traits approach is a
recent study of the impact of EMPRETE Brazil. In 2002, an evaluation was taken
to examine the actual impact of EMPRETEC programme in Brazil, which has
been operating for more than 10years. The evaluation showed that the level of
entrepreneurship among Brazelian participants in the EMPRETEC programme is
more than twice that of the overall population (40.4% compared to 14.2%). It
also, became evident that enterprises led by empretecos are more likely to survive
and display better economic performance. For instance, while labour productivity
in the Brazillian service sector had a value of R&13,000 between 1996 and 2000,
the value of productivity among companies of empretecos, of which 87% are
involved in the service sector, amounted to R&17,000 in 2001. Employment in
these companies rose by 29%, while the Brazilian service sector had an increase
of only 8.5 percent between 1996 and 2000 (EBECU, 2002:11-12, 28-29).
2.4.2 Framework for Analyzing Entrepreneurship and Economic
Development
Oteh (2009:20) argues that there is a paucity of framework for assessing
the relationship between entrepreneurship and economic development; pointing
out that:
One plausible explanation that has been advanced for this paucity
in the literature relate to the fact that until recently, macroeconomies, the field of economics most concerned with economic
growth and employment has largely not considered the role that
entrepreneurship plays in generating economic growth and
employment in management the academic discipline most squarely
focused on entrepreneurship – has typically not considered
implications for the broad economic context and certainly not the
link between that most micro of business phenomena – an
individual starting a new business and the most macro, the
performance of an economy.
This seeming analytical disconnection ensured that policy makers did not
have, at their disposal, the entire array of policy instruments that could be
marshalled towards using entrepreneurship to deliver economic prosperity and
security (Audretsch, Grilo and Thurik, 2007:1-17).
In their study of linking entrepreneurship and economic growth
Wennekers and Thurik (1999:27-55) developed a useful model for viewing
entrepreneurship (see fig 2.1). In this model, the determinants of entrepreneurship
can be examined from three distinctive levels of analysis the individual, the firm
and macro levels of entrepreneurship. The objects of the study tied to the three
levels of analysis are the individual entrepreneur small and large business and the
national economy, respectively. Studies on entrepreneurship at the individual
level focus on the decision-making processes of individual’s and their motives for
becoming self-employed.
A typical line of inquiry could analyses the decisions of individuals to
become either wage-earners or self-employed or focus primarily on personal
factors, such as psychological traits, formal education and other skills, financial
assets, family back ground and previous work experience that may influence or
affect entrepreneurs.
An analysis of entrepreneurship at the firm level would focus on marketspecific determinants of entrepreneurship, such as profit opportunities and
opportunities for entry and exist. The macro perspective focuses on a range of
environmental factors, such as technological, economic and cultural variables as
well as government regulations.
The assessment, also, covers the interrelationship between the three
levels-the individual level, the firm level and the macro level. The origin of
entrepreneurial activity is always, by necessity, the individual. Entrepreneurship
is induced by an individual’s attitudes or motives skills and psychological
endowments. The second level, the firm level, exists because the individual
entrepreneur is impacted by the context and environment within which they
operate. Entrepreneurial motives and actions are, also, influenced by cultural and
institutional factors the business environment, and macro economic conditions.
In this context, while entrepreneurship originates at the individual level,
realization is achieved at the firm level. The cooperation are vehicles for
transforming personal entrepreneurial qualities and ambitions into action At the
third level, the macro level, which represent the forum in which industries and
national economies operates the sum of entrepreneurial activities constitute a
mosaic of competing experiments new ideas and initiatives. Carree and Thurik
(2002) opine that this competition leads to variety and change in the market,
including a selection of the most viable firms, their initiation and a displacement
of obsolete firms.
Fostering entrepreneurship would therefore require a review of the role of
the individual, the firm, the government as well as other critical stakeholders.
McClelland’s theory of the need for achievement comes into play in the role of
individuals in fostering entrepreneurship. The human values and motives that
lead man to exploit opportunities, to take advantage favourable trade conditions,
shape the nature of entrepreneurship. The basis for this focus is that in any
society, some individuals will naturally become entrepreneurs, no matter what,
while others in that same society will never become entrepreneurs, no matter the
support they receive or the circumstance. In between these two extremes, lie large
numbers of individuals whose capacity to become entrepreneurs will depend on
the circumstances they are faced with. In other words, outside the natural
groupings of individuals into entrepreneurs and non-entrepreneurs, the society
will still have a large population of individuals who, under the right
circumstances, will become entrepreneurs. The crucial element in building a
nation of entrepreneurs is therefore, to identify those circumstances that are
conducive to turning a majority of those in this variable group into productive
entrepreneurs.
For-example, a well-developed legal property system could foster
entrepreneurship as Hernando de Soto (2000), in his study of emerging
economies across Asia, Africa, the Middle East, and Latin America demonstrated
that untitled assets that could not be used as capital was a primary barrier to the
kind of entrepreneurship that leads to capital accumulation and national economic
prosperity. He demonstrated that emerging economies already have a strong
saving culture and already have the assets needed to launch them into prosperity.
With a legal property system the variable group of potential productive
entrepreneurs could cooperate imaginatively in creating new uses for the assets
they already have. To unleash the innovative potential in people and assets that
they already possess, Hernando de Soto recommend the implementation of
measures that will ensure that the legal framework provides the infrastructure to
ensure the fluid transmission of marketable titles.
The Role of Firms: In emerging economies, more than 90% of all firms
(outside the agricultural sector) are small and micro enterprises, generating a
significant portion of GDP. Notwithstanding the critical role of the small business
many emerging economies including Nigeria, still do not have a legal and
regulatory framework that supports the growth of SMEs.
UNECA (2001) observes, after an extensive study, that outdated and
cumbersome laws and regulations have increased the transaction costs of SMEs,
thereby hampering their economic performance and growth in Africa. In addition
to this observation SMEs operation in Nigeria is hampered by access to finance.
This effects SMEs growth and development.
Role of Government: There is no doubt that government support
programmes cannot substitute for well-functioning markets and governments first
priority should be to get the economic fundamental rights. Government support
schemes can complement and support other policies to create an environment
conducive to entrepreneurial activities.
2.4.3 The Entrepreneurial Roles and Functions in the Development of the
Economy
The basic to the entrepreneurial role is the ability to recognize exploit
opportunities. According to Ejiofor (1989) the primary functions of
entrepreneurship are the identification of an investment opportunity. This consists
of understanding the need and waste of potential consumers which to set-up. In
other words, the entrepreneurs decide on the organization from the business
enterprise is to take.
Ugbaja (2000) avers that among the alternative firms are sole
proprietorship, partnership, private or public company. According the choice of
the nature of business also depends on such factors as the cost and procedures to
starting the business. Legal requirement, information and operation of business
continuity of the enterprise talent and skills needed, need for additional capital,
attitude towards sharing of profits and the size of risk of the enterprise. The
selection and acquisition of resources that would be needed for successful
operations of the business enterprises are also an important aspect of the
functions of the entrepreneur.
Omonyi (1999), opines that the size and quality of the resources utilized
in the business enterprise play critical role in the survival and growth of the
enterprise. He added that entrepreneur must therefore carefully select a suitable
site procure an appropriate technology and select the key personal that assist him
in the management of the enterprise. The entrepreneur must also establish and
maintain a satisfactory relationship with banks, government and prospective
suppliers etc. to ensure that they provide the necessary infrastructures for the
enterprise.
Ekwoanya (1994) notes that not only does the entrepreneur establish the
business enterprise he also operate it in order to achieve the goals he has
specified. He added that this involves determination of the task necessary to
achieve the goals, allocation of resources for the performance of the various tasks
co-ordination of activities, motivation of personal, providing leadership and
direction for the business enterprise.
Another function of the entrepreneur is risk bearing. Risk bearing has
been traditionally associated with the entrepreneur. There are various types of
risks in business. These include the risks that arise because decisions are future
oriented. These types of risk of a fall\demand resulting in loss, unfavorable
government polices and other unforeseen circumstances such cannot usually be
insured against and must be borne by the entrepreneurs (Otis, 1991).
The entrepreneur’s most important functions is innovation. This involves
creative responses to an investment opportunity by developing a new product,
new technology or the modification of existing ones to serve a need better.
Harriman (1989) states that the concept of innovation and newness as an
integral part of entrepreneurship means the act of introduction of something new
is the most difficult tasks for the entrepreneur. The newness can be anything from
a new product to a new organization structure.
The function of an entrepreneur with regard to innovation was expressed
by Donaldson (1993) as reforming or revolutionizing the pattern of production by
exploiting and incentive or more generally, a united technology possibility for
producing a new commodity or producing an old one in a new way or new source
of supply or a new outlet for products.
In this analysis an entrepreneurship tasks McClelland (1975) stresses that
unlike most managers in large stable organizations, entrepreneur must play many
roles in their business, these include the roles visualizing, planning, resources,
gathering organizing image selling and administration.
There are the major specific objectives borne in mind in promoting the
small medium enterprises (SMEs) in the third world countries including Nigeria
they are:
Stimulation of Indigenous Entrepreneurship
Invariably, the united nations industrial development organization UNDO
(1969), Killby (1967:20), Nwosu (1981), Faleye (1985:12) all note that in
developing countries, small to medium scale industries are one of the most
effective means of stimulating indigenous entrepreneurship.
By affording private individuals and groups to start business with minimal
resource requirements and by affording them the opportunity to manage the
businesses themselves, SMEs help to build up managerial skills in the local
produce.
Transformation of Traditional Industry
Both UNIDO already mentioned and Holm and Chuto (1976) agree that
investment in SMEs helps to transform the traditional sector. It modernizes the
people’s perception and it modernizes the traditional handcraft prevalent in the
rural economics, and introducing the use of manual labour in most economic
activities. Again the skills of traditional craftsman are modernized and
synchronized with the developments in the new industrial sector.
Creation of Employment
It has been pointed out at various times and with varying degrees of
emphasis that small to medium enterprise or entrepreneurship creates
employment for the teeming population of many nations. In Nigeria, for instance,
it is documented that small scale business employment about 30% of the entire
labour force (Acquad, 1986:40 Ukwu (1987) on his part, notes that small scale
generate the employment.
Linkage Effects
The various sectors of the economy is linked through the help of SMEs,
referring to
European Economic Community (E.E.C) countries, Faleye
(1983:114) observed that small scale industries provide the much need linkage in
industrial development of these countries, as they spread both in geographical
location and in scope.
The socio-economic rationale for the promotion of SMEs is reflected
according to Okongwu (1986) that:
We must always remember that it can rightly be
argued that in general no matter how strategic or
otherwise advantageous a large scale activity is or
may appear, small activity is more effective in
terms of employment generation, linkage effects
capital diffusion, the rise of entrepreneurship and
regional balance.
SMEs is the bedrocks of entrepreneurship in any economy, help to
mobilize resources that would otherwise remain idle in the hands of people and
utilize them productivity.
2.4.4 The Economic Imperatives of Entrepreneurship Development In
Nigeria
Since the dawn of the 20th century, the world economic powers have been
witnessing entrepreneurial boom. This accounts for the reasons for emergence of
millions of new jobs, particularly in the united State of America. This is much so
because America is a typical example of entrepreneurial economy, a free
enterprise states where the environment boasts of almost limitless prospects and
reward for private enterprise and self-employment creativity. It is economy that
rewards creativity and handwork, and whoever can boast of these attributes
stands to be financially wealthy within the shortest possible time.
Conversely, Nigeria started finding the right part to a possible
entrepreneurial venture in the 21st century. Since independence in 1960, the
country’s development plans have laid a great deal of emphasis on public sector
of the economy. We have a situation where the public/private sector mix has
increasingly tilted toward Public sector domination. For instance, while in the
first national Development plan (1962-68), the private sector received 62% of the
capital expenditure, in the fourth plan (1981-85), only 12% of the total capital
investment was accorded the private sector with the public sector controlling a
staggering 88%. This trend has generally distinguished the government as a
major investor in a lot of businesses which otherwise should have been left to the
private sector. But this apparently wrong development planning did not pass
without adverse consequences for the Nigerian economy.
Nevertheless, the February-1972 enterprises promotion decrees, otherwise
known as the Indigenization Decree changed the status quo. The decree saw
many companies hitherto owned and controlled by foreigners being bought over
by Nigerians. This situation again did not help matters as the government had
controlling shares in many of the enterprises. But the situation is changing, today.
Bad economic management, on the part of past leaders has boomeranged on
everybody. The oil boom of the 70s, which dictated the entire frivolous and
wasteful attitude of the government, and the people, including the relegation of
the agricultural sector, and private initiative to the background has mass
unemployment. The country was further forced to start afresh-to re-awaken
herself to the real challenges and realities of true Structural Adjustment
Programme (SAP) launched 1986 and its pivotal Second Tier Foreign Exchange
(SFEM), and foreign Exchange market (FEM), dictating the tone of action and
pace of movement.
The new emphasis on self-employment is understood to be in line with
the foregoing considerations. Government is basically, de-institutionalizing with
a lot of public enterprises slated for either full or partial privatization or
commercialization. The economy is being relieved of unnecessary government
controls and regulation. Import restrictions and control through mainly the import
system and tight tariff regime provide a way to the dictates of market forces.
Consequently, a change of policy that provides greater opportunities to similar
business run by Nigerians is more likely to increase than to reduce the rate of
growth of industrial output. (CBN Economic and Financial review 24 (4)
The unemployment situation in the country, coupled with the new
government initiative towards easing social tensions among unemployed youths,
through the programme of the National Directorate of Employment (NDE) was
intended to lure a lot of unemployed Nigerians including graduates, into selfdetermination through self-employment. Graduates and school-leavers are now
realizing that government and the established private companies are not ready to
come to their aid directly, through paid employments, due to the dwindling state
of the economy. Short of alternatives, Nigerians, including our graduates are,
therefore, launching themselves into various small business ventures such as
cottage soap and cosmetic production, farming, restaurants, fast food, publishing,
writing, brick-laying, garri production, food processing, refuse disposal, taxi
driving, clearing service, advertising and public relations, and other small
business ventures. The determination to succeed is, also fast becoming the order
of the day.
Udechukwu (2001) avers that the growth of small and medium scale
enterprise is because of its perceived importance to economic development.
However, the relative strength of their importance may vary from one industry to
another.
Small firms show their greatest strength (compared to large firms) in
service and construction (jobbing) contracts, while they tend to be dominated by
big firms in the areas of public utilities, manufacturing, communication and
transportation. In Nigeria, there are thousands of small businesses which include
farming, piggery and animal husbandry, fishing, pottery and ceramics, brick and
block moulding, bakery, weaving and tailoring, printing press, wood and metal
works, poultry and a lot of others, which depend mostly on local raw material
inputs.
In summary, SMEs contributes to the growth of the economy. They are
viable components in any strategy for reconstructing the economy. They
contribute in equitable distribution of national income; provide employment
opportunities, economic resources etc.
2.4.5 Role of Financial Institutions in the Development of Entrepreneurship
in Nigeria
In CBN proceeding (2004:124), financial institutions are financial
enterprises which perform one or more of several financial services such as
accepting deposits, brokering securities, activities, managing funds and
underwriting securities. In Nigeria these include:
a)
Banks
Commercial and Merchant Banks otherwise known as Deposit Money
Banks (DMBs) development banks, community banks (presently
Microfinance Banks) etc and
b)
Specialized Non-Bank Institutions
Discount houses, finance companies, primary mortgage institutions,
Insurance Companies Bureau de change, Nigeria Social Insurance Trust
Funds (NSITF) Pension Funds and National Economic Reconstruction Fund
(NERFUND) (CBN: 2001).
Sanusi (2004), as captured by CBN proceeding (2004:130), stated that:
Banks and other financial institutions are providers
of liquidity and payment services and therefore,
represent an important nerve centre of the economy
and the link between the real and the financial
sectors. In particular, they facilitate the
intermediation of financial resources through the
promotion of the savings and investment process.
They also constitute the institutional framework for
the conduct of monetary policy and the channel for
the transmission mechanism.
Consequently, it would be necessary at this point to narrow our discussion
on Financing Private Sectors-Led Growth especially at the grassroot which forms
the microcosm of Economic Growth and Development.
Financing Private Sector - Led Growth
It is obvious that no serious private sector-led growth strategy can expect to
succeed without a well developed financial intermediation system through which
enterprises can have access to investment funds. It would also be necessary to point
out here that Large Enterprises hardly have difficulties accessing loans because they
can readily provide needed collaterals unlike Micro Small and Medium Enterprises
(MSMEs).
The Micro Finance Policy in Nigeria
Present Global Economic conditions as well as the internalize constraints
within the Nigeria Financial Sector have made it imperative for a well focused
programme to reduce poverty through empowering the people by increasing their
access to factors of production, especially credit.
According to Littlefield and Rosenberge (2004):
"In turbulent times, micro-finance has shown to be a
more stable business than commercial banking.
During the Indonesian 1997 crisis, for example,
Commercial Bank Portfolios deteriorated, but loan
repayment among Bank Rakyal Indonesians 26
million micro clients barely declined. And during the
recent Bolivian banking crisis, Micro Finance
Institutions (MFIs) portfolios suffered but remained
substantially healthier than Commercial Banks".
From the foregoing, and coupled with the fact that CBN source (2005)
discloses that "In Nigeria, the formal financial system provides services to about
35% of the economically active population while the remaining 65% are excluded
from access to financial services, make the advent of micro finance system a
welcome development in Nigeria. Same source also went on to say that the latent
capacity of the poor for entrepreneurship would be significantly enhanced through
the provision of microfinance services to enable them engage in economic activities
and be more self-reliant; increase employment opportunities, enhance household
income, and create wealth.
One of the most important current programmes for Economic Recovery and
Development is the National Economic Empowerment and Development Strategy
(NEEDS). It is important to note that one of the hallmarks of NEEDS is the
empowerment of the poor and the private sector, through the provision of needed
financial services, to enable them engage or expand their scope of economic
activities and generate employment.
Micro Finance Policy Objectives
The specific objectives of this microfinance policy are the following:i)
Make financial services accessible to a large segment of the potentially
productive Nigerian population which otherwise would have little or no
access to financial services.
ii)
Promote synergy and mainstreaming of the informal subsector into the
national financial system.
iii)
Enhance service delivery by microfinance institutions to micro, small and
medium entrepreneurs;
iv)
Contribute to rural transformation; and
v)
Promote linkage programmes between universal/development banks,
specialized institutions and microfinance banks (CBN, 2005).
The above stated objectives proves that the microfinance policy is a
complete package and the way forward for the present and future needs of micro,
small and medium entrepreneurs.
2.5
Government Entrepreneurial Polices
To enable the private sector play the expected role as the engine of growth
of the economy, the government which has a fundamental responsibility of
promoting their growth has come up with policies to engender adequate private
sector participation. These include the new industrial policy of Nigeria which
came up in 1989 and the Structural Adjustment Programme (SAP) which was
introduced in July 1986, etc.
The New Industrial Policy which was launched in January 14th, 1989 by
the Federal Government contains incentives, guidelines and institutional
framework for the regulation of the industrial growth and development in
Nigeria. Its aims are, increased export of manufactured goods, dispersal of
industries,
providing
greater
employment
opportunities,
improving
the
technological skills and capacity available in the country. The incentives
contained in the policy are financial, fiscal and effective protection with import
tariff, export promotion zone at Calabar and Foreign currency facility for
international trade, technical! Institutional assistance etc.
The SAP aimed at altering and realigning aggregate domestic expenditure
and Production patterns so as to minimize dependence on imports enhance the
non-oil exports base and bring the economy back on balanced growth. According
to Ezejelue (1989:3), SAP is expected to expand non-oil exports, stimulate
research and increase local sources of industrial input, revitalize the agricultural
and Industrial sectors to achieve self sufficiency in food and industrial
production, eliminate the accumulation of further external debts, privatize
commercial interests of government, encourage a new inflow of foreign
investment into Nigeria and adoption of a realistic exchange rate policy.
Some Of The Incentives Given By The Government Are:A.
Financial Incentives: Finance is the life wire of business and an essential
Ingredient for the survival and growth of any business enterprise.
Governments role as a financier of business comes mainly through
government agencies, financial institutions and establishments that
provide various types of funding for both the public and private
enterprises. The Development Finance Institutions (DFIs ) which are
government institutions established for meeting the medium and long
term needs of business organizations for credit and investments include
NIDB (The Nigerian Industrial Development Bank), NBCI (Nigerian
Bank for Commerce & Industry) NACB (Nigeria Agriculture and Cooperative Bank), FMBN (Federal Mortgage Bank of Nigeria), UDB
(Urban Development Bank), PBN (People's Bank of Nigeria) .NIDB was
established in 1964 is to provide medium and long-term finances to
industrial enterprises ascertained to make significant contributions to
economic development of Nigeria. It identifies investment priorities,
supervises projects and carries out feasibility studies on investment
projects. It provides technical and managerial consultancy services to
organizations. The Nigerian Bank for Commerce and Industry (NBCI)
established in 1973 to underwrite share issues particularly those arising
from indigenous business men to acquire the ownership interest of aliens
affected by indigenization decree and .also assist businessmen by
providing consultancy services in identifying and funding viable business
projects.
The Nigerian Agricultural and Co-operative Bank (NACB) established in
1973 to improve the level of production of all aspects of agricultural
production and the availability and marketing of agricultural products
through extending liberal credit facilities to farmers co-operate and allied
industries. These include farming, Poultry, fisheries, animal-husbandry,
forestry and timber production as well as Storage, distribution and
marketing connected with such production. NACB’s Sources of funds
include government subventions, credit shortfall on agricultural Loans
through the CBN and loans from international finance institutions/ World
Bank, African Development Bank, European Investment Bank etc. The
Federal Mortgage Bank of Nigeria (FMBN) was established to promote
mortgage Institutions. Urban Development Bank (UDB) established in
1993 was to cater for the financing of urban development needs of
Nigerian cities and urban centers. The Peoples Bank of Nigeria (PBN)
established in 1989 to provide small funds to small business owners at a
free interest rate.
The Central Bank of Nigeria credit guide lines, Commercial and Merchant
banks to allocate a stipulated minimum credit to preferred sectors of the
economy especially to entrepreneurs. Apart from the OFls, other support
agencies involved in the production and development of entrepreneurship
in State and Federal levels are the Industrial Development Centers (IDCs)
established to provide technical support and manpower training facilities
to industries. Others are NRFUND, NDE, DFRRI, VSS.
The National Economic Reconstruction Fund (NERFUND) was
established in 1989 to provide medium and long-term funds to
entrepreneurs. It is also to correct any observed inadequacies in the
provision of medium and long-term finances. It also provides medium and
long-term loans to participating commercial and merchant banks for 011
lending to entrepreneurs. It facilitates the provision of maturity, including
a grace period of one to three years depending on the nature of the
enterprise or project and finally to provide such loans either in local or
foreign currencies.
The National Directorate or Employment (NDE) established in 1988 by
the federal Government to encourage the development and survival of
entrepreneurship. It is charged with the provision of loans to young
graduates to establish their own business. This programme sparked off the
highest number of small-scale businesses throughout the country. The
loans are without hard measures and rigid lending guidelines 0 r
commercial banks. The entrepreneur here, enjoys low taxes, free technical
advice and support services. The Directorate of Food, Roads and Rural
Infrastructure (DFRRl) establish in 1987 to provide electricity and good
roads in rural areas. The need arises as a good number of entrepreneurs
are in the rural areas and source raw materials from there this helped in
the reduction of overhead costs.
The Volunteer service Scheme (VSS) operated by the government of the
old Anambra State to train unemployed and unskilled youths to acquire
various skills and thereafter, provide them with start-up capital. Others are
the Universal Investment and development Company Benin, the Central
Investment Company Enugu (owned by the South East Government), the
New Nigerian Investment Ltd (NNIL) Kaduna (owned by the old eleven
Northern States), Odu'a Investment Ltd Ibadan (owned by the old western
states government excluding Lagos), which is one of the biggest
investment companies in Africa.
B.
Fiscal incentives: Besides financial incentives, the Nigerian government
provides other forms of assistance to entrepreneurs to give them some
considerable measure of relief and advantages in carrying out their
activities. Some of these are tax and tariff related incentives. Tax holidays
are granted to entrepreneurs for the first six months of operation.
Nwabuzor (1990:45) noted that government has however, taken some
concrete steps to ameliorate the tax burden on enterprises. One of such
was the amendment of the Company's Income Tax Act of 1979, by
section 32 of the finance (Miscellaneous Taxation Provision) Decree of
1985, which reduced withholding tax on interest income from 45 to 15%,
a decision intended to attract reinvestments. This was followed in 1987 by
the reduction in the taxation rate on corporate profits from 45% to 40%
and currently to 35%. Tariffs are mainly used by government to protect
local and infant industries in Nigeria, usually against foreign goods. In
1988, the federal government established the Tariff review Board to carry
out a comprehensive study and review of the Customs and Excise Tariff
of the country to provide an appropriate level of protection for domestic
industries. The government then reduced the number of excisable
products from 412 to 182 items most of which are final and luxury
products. Import duties were increased on dry cell batteries from 25% to
45%, syringes and needles, from 25% to 40%. In recent years, the
Nigerian government has taken various measures towards reforming and
reviewing the customs and excise provisions on tariffs and duties for
various categories of products. Such measures include:i
The review of import and export prohibition list. Such goods as frozen
poultry products have been out rightly prohibited.
ii
The review of items for export as wet blue and all unprocessed leather is
still prohibited. This will ensure the protection of existing local tanneries
which process leather into finished products. The prohibition of
exportation of wet blue leather is also meant to enhance local capacity
utilization, generate foreign exchange through exports of finished
products and also increase and guarantee the employment generation
potentials of the sub sector.
iii
The abolition of import duty rebate introduced in 1995 (25%) .
iv
Ports and customs reforms notably, the phasing out of the pre-ship
inspection of imports (introduced in 1979) and the planned replacement
with destination inspection, with effect from 2003. By this ensure, it
would no longer be necessary to have Import Duty Report (IDR) on goods
to be imported into Nigeria, as assessment of duties would be done upon
arrival of goods in Nigerian Port. Most contra bound goods will be ceased
thereby encouraging the populace to source it locally from indigenous
entrepreneurs. Also high excise duties will be levied on certain items as
spirits, cigarette, tobacco at the rate of this is particularly directed in
safeguarding the citizenry's health.
C.
Export Promotion Incentives: In the 1950's and 1960s, agricultural
products like cocoa, rubber, palm produce and groundnut accounted for
over 80% of Nigeria's total export. The discovery of oil in Nigeria in 1956
and the instant economic fortunes that it brought blinded the country's
from further developing other non-oil sectors. Nigeria now became
ferocious importers of everything from white sliced bread to Mercedes
etc. The most taxing question in the Nigerian Politics at that time was
how to spend all that money. The events thereafter and the consequent
economic recession became the price Nigeria had to pay for their neglect.
As a result, its foreign reserve dipped. To shore up Nigeria's foreign
reserve and revive the non-oil economic activities, the government came
up with a lot of policies to encourage export activities by entrepreneurs.
Its highpoint was the promulgation of a decree in 1986 with a package of
incentive for export e.g. the export development fund, export expansion
grant, duty drawback scheme, duty suspension scheme and manufacture
in bond scheme.
i.
Export Development Fund Scheme: A scheme whereby the federal
government and the private sector contribute into a fund which will be
used to finance a series of export promotion and development activities
_like training, workshop, symposia, research, studies, consultancy
services, local and oversea trade fairs.
ii.
Export Expansion Grant: Involves the giving of cash grant to local
manufacturers who achieve a minimum of N50,000 worth of exports
annually. This was to encourage such manufacturers to increase their
export sales value.
iii.
Duty Drawback Scheme: This allows importers to claim rebates on
duties paid on imported products and materials (raw materials equipment
and machinery) meant for use in the manufacture of other goods meant
for exports.
iv.
Duty Suspension Scheme: This involves the lifting of duties paid on
certain categories of exports.
v.
Manufacture in-bond Scheme: This involves the non-payment of duties
on imported raw materials for the production of exportable goods backed
by a bond issued by a first class bank. The performance bond is
discharged after evidence of exportation and repatriation of foreign
exchange earnings to the country.
The government bodies for the promotion of exports are:
1.
The Nigerian Export-Import Bank (NEXIM), bank to provide export
stimulation loan facilities to entrepreneurs.
11.
The Nigerian Export processing zones Authority (NEPZA) (at Calabar
and Kano) with duty free incentives.
iii.
The Nigerian Export Promotion Council (NEPC) charged with the
primary responsibility of administering export incentives to entrepreneurs.
D.
Technical/Institutional Assistance: Entrepreneurs in Nigeria have
equally over the past decade enjoyed technical assistance and
implementation support from the government's numerous institutes and
agencies. Such government technical institutes and agencies are the
various industrial research institutes like the Industrial Development
Centres (IDcs), the Centre for Industrial Research and Development
(CIRD), Centre for Management Development (CMD) SME Unit, Federal
Institute of Industrial Research Oshodi (FIIRO), Project Development
Agency (PRODA) Enugu, Raw Material Research Development Institute
(RMRDC), etc. These government technical institutes and agencies have
largely supported the entrepreneurs and have in particular rendered
assistance to them ranging from manpower training, appropriate
machinery selection and installation, machine repairs and maintenance as
well as extension services (CBN Annual Reports and Statement of
Accounts 1977).
2.6
Macro-Economic Policies
2.6.1
State of Infrastructural Facilities In Nigeria
The basic infrastructural facilities that come readily to mind are water and
energy resources, means of transportation, telecom and buildings. These form
physical/economic component of infrastructure. There is also the social component
of infrastructure such as education, training and health. These constitute what is
known as human capital. Our emphasis here will be on physical infrastructure as
other aspects of the study have touched on the human capital aspect. Let us look at
these, one after the other as disclosed by Central Bank of Nigeria (CBN) source
2003.
a)
Water Supply
Nigeria has an estimated surface water supply of about 283 litres/m2. This
amount is more than 100 times the water resources of Israel, a country that
exports vegetables and fruits to Europe and other parts of the world
including Nigeria. The underground water potential on the other hand is
estimated at 87 billion cubic meters.
Despite this abundant water resource, statistics show that only about 30% of
Nigerians have access to safe water. And even at that, the per capital water
consumption rate of Nigerians is barely 24 litres per day as against World
Health Organization (WHO) standard of 130 litres and 70 litres per person
per day for urban and rural dwellers respectively,.
b)
The State of Housing, Roads and Rail
The state of road and housing has attracted not only the attention of
Nigerians but also the international community. In a report by Shelter Rights
initiative (SRI) submitted to the UN committee on economic, social and
culture rights, it was observed that the provision level of housing in Nigeria
stands at only 2.3 dwelling units per 1000 persons as against 8 - 10 units
recommended by the UN for an annual growth rate of 3.3%.
In the same vein, the state of roads in the country has almost crippled the
nation's economic activities. World Bank (1997) reported that up to 15% of
production is lost between farm gate and the consumers because of poor
roads and storage facilities, thus reducing incomes to farmers and raising
costs to urban consumers. As cities grow, the need for infrastructure
becomes all the more important statistics show that paved roads constitute
less than 20% of the national networks and less than half could be said to be
in good condition.
c)
Energy
Electricity supply has a direct influence on the development of a country's
industrial and manufacturing sector. Power supply has been so erratic and
unreliable that many businesses and high income households have resorted
to purchasing private generators at prohibitive cost. The effect is adversely
felt in the industry. As manufacturer are required to invest huge capital fund
to provide alternative infrastructural facilities for their operations, domestic
industries carry high cost of competitiveness for their products in both
domestic and foreign markets.
d)
Telecommunications
Before the liberation of the Telecom industry, erratic inefficient delivery of
services by the NITEL almost crippled the social-economic activities in
Nigeria. The process of deregulating the industry was initiated to tackle
observed shortcomings. It is expected that the global communications
system - GSM, internet services and other recent telecom services will speed
up private sector development in Nigeria.
e)
Health Care
Simbine (2001) measured the access to healthcare service based on health
facility per 100 people. He showed that within 1995 and 2000 there was
0.07% health care services available for every 1000 Nigerians. This is
grossly inadequate as the health state of the citizenry has a direct impact on
productivity growth and development, and should be treated with caution.
2.7
Entrepreneurship and Managerial Problems
Research work has pointed to poor management as the major factor that
causes business failure. Some entrepreneurs depend on their personal skills in
running the Enterprise. They could be skilled artisans but may not know the basic
principles of management. They have to compete with large business that has
better finance and specialists to help them make better decisions. A lot of highly
skilled personnel do not like to work with entrepreneurs because of inability to
pay attractive wages nor fringe benefits, packages nor give job security. Some
entrepreneur therefore hire cheap and unskilled labour which constitute
managerial problem, their poor financial base and stunted resources make it
difficult for them to train their employee. Their poor management could lead to
improper carry out of the key managerial functions; planning, organizing,
directing, controlling, decision making.
Lack of Proper Planning: Planning is the most important managerial function.
The manager should prepare and predict future events. This is achieved by
Establishing objectives and strategies to achieve these objectives.
Lack of Organizing: Organizing deals with determining the tasks to be
performed and establishing a framework of authority and responsibility.
Lack of Directing: Directing involves the ability of the entrepreneur to motivate,
educate, guide and communicate to the subordinates.
Lack of Controlling: Controlling involves ability to prevent, identify and correct
deficiencies in all phases of the operation.
Lack of Making Proper Decisions: Decisions are very sensitive. They deal with
the setting of policies, setting of goals and taking of vital decisions.
Most of the problems encountered by entrepreneurial organizations are:
•
Lack of finance
•
Lack of training and adequate preparation
•
Lack of adequate capital and over stretching of capital
•
Too much or too little investment in fixed assets
•
Poor credit management
•
Lack of understanding and appreciation of technology
•
Lack of appreciation and use of accounting function
•
Premature expansion
•
Unhealthy competition
•
Inability to separate self from business.
Finally, bad attitudes, neglect and absentee landlord.
Many entrepreneurs think it is easy to set up a new business or even to
expand an existing one. This is not so, because setting up a new business is a
complex exercise. A potential entrepreneur must take stock of his own needs
drives and aspirations before taking the decision of embarking on an entrepreneur
to determine whether his personality fits the entrepreneurial drive.
McClelland and his associate identified three basic needs that already
been discussed, as the focal psychological drives that motivates the individual
towards accomplishment is an entrepreneurial fulfillment of a goal embodying a
reasonable challenge that direct economic consequences.
Affiliation need is food in the basic nature of man. Man wants to be
recognized, loved, affiliated with others, wanted by others in a warm, friendly
manner. The desire to be like and accepted motivates an individual to enter into
business with a new to satisfy his needs as well as satisfy the needs of others
through entrepreneurship thus, entrepreneurial development involves deliberate
activities aimed at satisfying one’s needs and that others it is a contractive
relationship involving intra and inter organization network of relationships.
Power is another aspect of entrepreneurial development. It describes the
need to control the means of influencing others. The entrepreneur owns
resources, which he allocates employment in his company. He has dominance
over others and or by giving others employment in his company. He has
dominance over others and exercises superiority and authority over other as the
owner of the business.
Based on the McClelland theory of entrepreneurial development, the
author posits that entrepreneurship is a complex activity and involved careful
analysis of oneself, the business itself, the market and the development of
managerial competence.
Examine Your Self
If you are contemplating on starting and running a business, you must first
of all examine yourself to determine whether you possess entrepreneurial
personality. The entrepreneurial personality is characterized by special qualifies.
If you discover that personality traits are closely aligned to those traits as
enumerated by McClelland and associates, you are then confident to proceed in
your business plans.
Know the Business
Often time’s entrepreneurs jump into starting a business just because his
friend or relation or neighbours is doing well in that business without knowing
the fundamental of that success. For one to succeed in business, he must have a
solid background in that specific business. The technical requirement of getting
out the product rendering the service should be understood in considerable detail
before embarking into business. Every business has its own norms, customs,
language and technical know-low. Potential entrepreneur should learn these
features and even add some innovative strategies to the existing one if he does
well in the business.
Study the Market
A survey conducted on the causes of small business failures reproduced
he following results. Lack of sales, competitive weakness, poor location, in
adequate information and poor management. These problems can stem many
sources, but prominent among them is lack of knowledge of the market. Potential
entrepreneur must know how to identify the needs of potential customer and
convert them into wants. He should be able to know marketing and set prices. He
should be able to see the products or services and how to manage the entire
marketing tasks. Identifying the customer’s satisfaction is the beginning of every
successful business.
Financially Prudent and Management Competent
The management of finance is one of the most important aspects of
entrepreneurship. The entrepreneur must recognize that the problem is not of
starting a business, but being able to keep alive and nurture it to grow. This
means understanding the consequences of every financial decision made by you
as an entrepreneur. The life blood of any business is cash flow and profit. The
entrepreneur thus, must know the financial short long range plans and projections
needed to manage cash flow and produce profits. These plans enables and
projections delve into the future so as to control the future rather than allow the
future to control you and destabilize your business.
Planning is the essence of management and an entrepreneur must plan for
every aspect of his business. He must plan for finance so as to avoid the danger of
diminishing cash flow and lack of profit.
Analyzing Risk
The nature of entrepreneur is risk taking. He must be prepared to succeed
or fail. The notion of one doing his own business is risk, because the invests with
the hope of succeeding. That hope is calculated risk. The entrepreneur must take
the first of the investment. Entrepreneur does no just take the risk, but he
calculates the risk and analyzing it before making decisions on pricing
manufacture item A instead of item B, employing staff to assists in running the
business inventory decisions travel plant etc. all these decisions is the part of the
risk and ability to take efficient and appropriate decisions is the control of
business risk.
2.7.1
Problems and Causes of Business Failure in Nigeria
Research has shown that several small businesses that sprout up in the
country often do not survive the first few critical years of existence (5 years).
Notable amongst the numerous causes of business failure in Nigeria include:
a)
Under-Capitalization
Lack of finance either for the establishment of new industries/businesses or
to carry out expansionary projects is a great disincentive to small business
development in Nigeria. Also the inability to attract financial credit has
stifled growth of these ventures. Banks on the hand, give a number of
logical reasons for not giving out loans to small scale businesses ranging
from unviable feasibility studies, lack of management skills, no collateral
base, and inadequate finance or accounting records about their businesses.
Also included is the high percentage of default on repayment of loans, and
diversion of borrowed funds for personal use. Budding and practicing
entrepreneurs should guard against these lapses.
b)
Poor Business Accountability
Often most small business owners fail to draw a line between personal funds
and business funds. Cash and stocks are taken at will for personal use
whenever the need arises without accounting for such withdrawals.
c)
Poor Record Keeping
Some small business persons/industrialists believe that the maintenance of
books of accounts on other business records are expensive and unnecessary
not to talk about living the services of trained account or other financial
experts.
d)
Lack of Experience
The place of a mentor in business cannot be overlooked. Albert (1980),
suggested ways to make up for experience deficiencies for entrepreneurs working for some one in the kind of business contemplated of, or taking on
a partner with the need experience.
e)
Lack of Business Knowledge
Knowledge consists of facts and theories that enable people to understand
phenomena and to solve problems. Ways to acquire knowledge include
habit, trial and error, authority, tradition, institutions, expert opinions,
personal experience, education and induction, etc.
f)
Poor/Wrong Location
The guiding factors that should determine the location of any business
should include: nearness to raw materials, market, source of power and
access to supply of labour and transport facilities, etc. According to Hastings
(1968), the small business must analyze their unique situation before
choosing the town and actual site for the business. Some of the checklist
suggested includes competition, traffic low, transportation, packing
facilities, unfavourable characteristics, and the availability of business
service, among others.
g)
Inadequate Planning
Planning is defined as determining in advance what to do, how to do it,
when to do it, who is to do it, and even why you should do it. Planning is an
essential ingredient in a Business Development and is often reflected on a
comprehensive business plan.
h)
Inadequacy of Infrastructural Facilities
Water, electricity, accessible roads, and other means of communication is a
sine qua non to the efficient performance of small scale enterprise.
i)
Poor Competition Position
Onuoha (1994:332) stated that it would amount to business naivety to
belittle the impact of the giant organizations in any industry. They set the
pace,
their
prices,
products,
internal
and
external
operating
methods/techniques have this-pace-setting feature.
j)
Incompetence of Management
Lack of management ability, on the part of the small business manager has
been one serious cause of failure. Good management ability is a prerequisite
for success in both large and small business firms alike. Concretely this
means skill in handling men, money, and inventory along with the ability to
formulate wise policies, select proper methods, merchandise aggressively
and create good relationship with employees, customers and the general
public. Other problems and causes of small business failure include:
i)
Unplanned Expansion
ii)
Inadequate Credit Control
iii)
Neglect and Time Pressure
iv)
Lack of Proper Inventory Control
v)
Poor Education and Lack Required Skills
vi)
Government Policies and Regulations
vii)
Problem of not Conducting Feasibility Studies and Developing
Business Plans
viii)
2.8
Problem of Acceptability Nigerian Made-Goods
Summary of the Review of the Related Literature
The study looked into the theoretical framework of entrepreneurship. The
study underlying theory is the Cochran’s sociological theory of entrepreneurship
and David McClelland’s need for achievement motivation theory. Also the study
x-rayed the conceptual and historical overview of entrepreneurship. In addition,
the study delve into entrepreneurship and economic
development roles in
developing economy like ours.
The government policies and macro-cum micro policies were intensively
discussed and its improving facts to the economy, the study highlights the
factors/reasons for entrepreneurial success. The managerial problems of
entrepreneurial organization and problems that causes business failure in Nigeria
was identified.
Finally, though this research work, we discover the role of small and
medium business enterprises and the desirability of government policies that
would enable these business to grow. The gap in this study is the inability of
these policies fast rack the growth and development expected of it. This boils
down on the implementation challenges.
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Thorton, P. (1999), “The Sociology of Entrepreneurship”, Annual Review of
Sociology; 25(9).
Thurik, R. and Wennekers, S. (2001), A Note on Entrepreneurship, Small Business
and Economic Growth, Rotterdam: Erasmus Research Institute of
Management Report Series.
Udechukwu F. N. (2001), “Survey of Small and Medium – Scale Industries and
their Materials in Nigeria 4(4).
Uduebo, M.A. (1985), “The Role of Monetary and Fiscal Policies in Industrial and
Agricultural Development in Nigeria” CBN Economic and Financial
Review; 23(1).
United Nations Conference on Trade and Development (UNTD 2005),
“Entrepreneurship and Economic Development: The EMPRETEC
Showcase”, Geneva: UNCTAD.
CHAPTER THREE
RESEARCH METHODOLOGY
3.1
Introduction
This chapter describes the various methods and procedures of collecting
information and generating data for the studies, as well as the statistical methods
for analyzing them.
3.2
Research Design
A research design is the frame work or pan for the study which is used as
a guide in collecting and analyzing the data. The survey research method was
adopted for this study.
Tull and Album (1975) define survey research as the systematic gathering
of information’s from respondent for the purpose of understanding and/or
predicting some aspects of the behaviour of the population of interest. Wimmer
and Deminick (2011) Opines that survey research is of advantage because: It can
be used to investigate problems in realistic setting; the cost of survey is
reasonable when one considers the amount of information gathered; A large
amount of data can be collected with relative ease from a variety of people;
survey are not constrained by geographical boundaries.
3.3
Sources of Data
Sources of data collection include primary and secondary sources.
3.3.1 Primary Sources
Primary data refer to original data collected basically for the purpose of
the study. In collecting primary data for these study two devices was adopted
thus: oral interview and the use of questionnaire.
3.2.2 Secondary Sources
Secondary data were obtained from facts already documented by others
which are considered valid for the study. The secondary source of data for this
study includes textbooks, internet, journals, articles and unpublished works
3.4
Population of the Study
The population for this study includes entrepreneurs, chief executives,
managers, management staff and senior staff of the five selected small and
medium scale enterprises out of the total of 18 firms that deal on chemicals and
pharmaceuticals in Enugu State. These firms were judgementally chosen from a
list of entrepreneur collected from the office of the s Small and Medium Scale
Enterprises (SME), Enugu zonal office (see appendix 4). However, the
companies mentioned here covers Anambra, Enugu and Ebonyi State. For
clarification, those entrepreneurs marked aesthetics (*) were the ones that operate
in Enugu State.
Table 3.1 Population Distribution
S/N
Name of Firm
Populations
1.
Juhel Nig. Ltd
345
2.
Hardis and Dromeda Ltd
254
3.
Integrated Chemical Industries Ltd
233
4.
A.C. Drugs Ltd
159
5.
Nalin Paint Ltd
159
Total
1,100
Source: Field Survey 2012
3.5
Determination of Sample Size
Sample is a fraction or segment of the total population whose
characteristics is used to represent the entire population. The formula adopted in
determining the sample size is that given by Taro Yamane:
n
Where
=
N
1 +N (e)2
n
=
the sample size to be determined
N
=
the Finite population
1
=
constant
e
=
margin of error
n
3.6
=
1, 100
1 + 1,100 (0.05)2
=
1,100
1 + 1,100 (0.0025)
=
1100
1 +2.75
=
1,100
3.75
=
293.3
=
293
Sampling Procedure
Sample random sampling technique was adopted, the essence was to
ensure fair representation of each firm, as the sample drawn from each firm is
proportional to the firm’s population in relation to the total populations using
proportionality formula thus:
Q = A/N x n/1
Where:
Q
=
The number of questionnaire to be allocated to each segment
A
=
The proportion of each segment
N
=
The population of all the segment
n
=
The estimated sample sized used in the study
The break down of sample size according to each firms with the
proportional formula stated above is computed below:
Juhel Nig. Ltd
Q
=
345 X
1100
293
1
=
92
293
1
=
68
=
62
Hardis and Dromedas Ltd
Q
=
254 X
1100
Integrated Chemical Industries Ltd
Q
=
233 X
1100
293
1
A.C. Drugs Ltd
Q
=
159 X
1100
293
1
=
42
293
1
=
29
Nalin Paints Ltd
Q
=
109 X
1100
Table 3.2: Tabular presentation of sample size
S/N
Name of Firms
Populations
Sample
1.
Juhel Nig. Ltd
345
92
2.
Hardis and Dromedas
254
68
3.
Integrated Chemical Industries Ltd
233
62
4.
A.C. Drugs Ltd
159
42
5.
Nalin Paints Ltd
109
29
Total
1100
293
3.7
Description of the Research Instrument
The research instruments used for the study are questionnaire and oral
interview.
Questionnaire is designed to have two sections. All the questions
section A contain biographic data while the questions section B are aimed at
obtaining data and information that addressed the research objectives, questions
and hypotheses. The questionnaire was designed using the Likert Scale format of
Strongly Agreed, Agree, Disagree, Strongly Disagree, and Undecided. It contains
a total of 19 questions and 293 copies of the questionnaire are distributed to each
of the categories.
3.8
Validity of the Instrument
Validity is the ability of the research instrument to measure what it is
supposed to measure (Asika 2009:17). In order to ensure the validity of the
research instrument proper structuring of the questionnaire and a conduct of a
pretest of all the questions contained in the questionnaire were carried out.
However, the researcher uses content validity to ensure the validity of the
instrument.
3.9
Reliability of the Instrument
Reliability refers to the consistency or reproducibility of the result of the
test. To ascertain the instrument reliability, the researcher adopts a test-retest
method in which the questionnaire was distributed. The instrument was collected
afterwards and re-administer for the second time. Using the person’s product
moment correlation coefficient of reliability. The exercise guided a correlation
coefficient of approximately 0.87. Therefore, the instrument is termed highly
reliable.
Table 3.3: Test – retest Computation Details
2nd
Pretest Y
R2 (Rank)
of X
RY
D = Rx – Ry
D2
1
1st
Pretest
(X)
285
275
1
1
0
0
2
279
261
2
0
2
4
3
283
281
7
5
2
4
4
281
274
5
7
-2
4
5
282
285
4
3
1
1
6
276
274
3
3
0
0
7
280
279
7
7
0
0
8
281
285
9.5
9.5
0
0
9
279
255
1
4
-3
9
10
282
285
9.5
9.5
0
0
Total
Σx =
Σy =
ΣRx = 49
ΣRy =
ΣRx – Ry =
ΣD2 = 22
2,808
2,754
49
0
S/N
Source: Field Survey, 2012.
Correlation coefficient = R =
1
-
6Σd2
n(n2 -1)
By substitution
=
1
–
6Σd2
10(102 – 1)
=
1
–
132
10(100 – 1)
=
1
–
132
10(99)
=
1
–
132
990
=
1 – 0.133
=
0.87
3.10
Data Analysis Techniques
Data were presented in frequency tables. The non parametric statistical
chi-square and F-test was used to test the hypothesis.
Chi square statistics is the measure of discrepancy between the observed
and the expected frequencies. F-test on the other hand, is a test of the difference
between more than two population means for small samples. This tools are
therefore appropriate of test the hypothesis. Z – test is the test of the difference
between two population means.
The formula for-chi square is given below:
X2
=
Ɖ (oi – ei)2
ei
Where
oi
=
Observed frequency obtains after an experiment is
carried out
ei
=
Expected frequency generating on the basis of
speculation
£
=
Summation
X2
=
Chi square
The degree of freedom
This is the assumption of certain level of confidence or error margin. The
degree of freedom which is significant in the use of Chi-square is presented in the
form below.
(r - 1) (c - 1)
Where:
r
=
number of rows
c
=
number of columns
Decision Rule
Reject Ho if x2 c > x2t
Accept Ho if x2 c < x2t
Where
X2 c is Chi-square computed
X2 t is Chi-square tabulated
The formula for F–test:
SST
=
ΣjΣj X2ij
-
T2
rk
SSB
=
ΣjTj 2 r
T2
rk
SSE
=
_
SST – SSB or ΣiΣi (Xij – X)2
SST
=
the total sum of squares,
SSB
=
the sum of squares between group variation,
SSE
=
the error sum of squares.
R
=
the number of rows
K
=
the number of columns.
Where
REFERENCES
Asika N. (2009), Research Methodology in the Behavioural Sciences Lagos:
Longman Nigeria Plc.
Obikeze D. (1998), “Unpublished Lecture Note on Social Research Method”
Nsukka: UNN.
Reylon J. (2001), Communication Research: Asking Question, Finding and
Answer, New York: McGraw-Hill Inc.
Tull D. S. and Abum G.S (1975), Survey Research: A Decisional Approach, New
York: Intex Educational Publishers
Wimmer R. D. and Dominick T. A. (2001), Mass Media Research-An
Introduction, UK: Wad Sworth Cengage Learning.
Yamane T. (1964), Statistics: An Introductory Analysis, New York: Harge and
Row Publishers
CHAPTER FOUR
DATA PRESENTATION AND ANALYSES
4.1
Introduction
The focus of this chapter is on the presentation and analyses of data
generated through questionnaires administered to the respondents. The data were
presented in tables while inferential and other common statistical aids were used in
analysing the data generated. Table 4.1 represents the questionnaire distribution and
retrieval pattern, as well as the percentage of return among the five categories of
respondents.
Table 4.1:
Questionnaire Distribution
Category of Respondents
No.
%
Distributed
No
%
No Not
%
Retrieved
Retrieved
Juhel Nig. Ltd
92
31.3
92
100
0
0
Hardis and Dromedal
68
23.3
66
97
2
3
Integrated Chem. Ind. Ltd
62
21.2
59
95
3
5
A.C. Drugs Ltd.
42
14.2
40
95
2
5
Nalin Paint Ltd
29
10.0
28
97
1
3
Total
293
100
285
97
8
3
Source: Field Survey Work, 2012.
From Table 4.1, it shows that a total of two hundred and ninety three (293)
copies of the questionnaires were distributed to five firms (Juhel Nig. Ltd, Hardis
and Dromedas, Integrated Chem. Industries Ltd, A.C. Drugs Ltd and Nalin Paint
Ltd). Out of the 293 copies of the questionnaire distributed, only 285 were retrieved
while 8 copies were not retrieved.
4.2
Demographic Data Presentation
The biographic information of the respondents were supplied by section A
of the likert scale questionnaire. The first five (5) questions in section A were
answered by the tables and analyses below:
Table 4.2.1:
Gender
Gender Distribution of Respondent
Juhel
Hardis and
Integrated
A.C.
Nalin
Nig. Ltd
Dromedas
Chem. Ind.
Drugs
Paints
Ltd
Ltd.
Ltd
Total
%
Male
64
47
43
30
16
200
70
Female
28
19
16
10
12
85
30
Total
92
66
59
40
28
285
100
Source: Field Survey Work, 2012.
From Table 4.2.1 above, it was observed that 200 respondents, representing
70%, were male, while 85 respondent, representing 30%, were female. This
indicated that males were more than females.
Table 4.2.2: Marital Status
Gender
CATEGORIES
A.C.
Total
%
Juhel
Hardis
Integrated
Nalin
Nig.
and
Chem.
Ltd
Dromedas
Ind. Ltd
Ltd.
Ltd
Married
52
39
39
28
19
177
62.1
Single
38
24
20
12
9
101
35.4
Divorced
1
1
0
0
0
2
0.7
Widow/widower
1
2
1
1
0
5
1.8
Total
92
66
59
40
28
285
100
Drugs Paints
Source: Field Survey, 2012.
Table 4.2.2 indicates that 35.4% of the respondents were single, while
62.1% were married. 0.7% were divorced while 1.8% were either widow or
widowers.
Table 4.2.3:
Age Bracket
Age Bracket
CATEGORIES
Juhel
Hardis
Integrated
A.C.
Nalin
Nig. Ltd
and
Chem.
Drugs
Paints
Dromedas
Ind. Ltd
Ltd.
Ltd
Total
%
18 – 30 years
27
11
15
7
5
65
22.8
31 - 40 years
30
24
20
12
6
92
32.3
41 – 50 years
15
13
15
15
10
68
23.9
51 – above
20
18
9
6
7
60
21.9
Total
92
66
59
40
28
285
100
Source: Field Survey, 2012.
From Table 4.2.3 65(22.8%) respondents were aged 18 - 30 years while
92(32.3%), respondents were aged 31 – 40 years. 68 respondents, representing
21.9% were in age brackets of 41 - 50 years and 60 respondents, representing 21.9%
were in age brackets of 51 - above, respectively. This indicated that greater
percentage of the respondents were adults who could make informed
decision/judgment.
Table 4.2.4:
Academic Qualifications
Academic
Qualification
CATEGORIES
A.C.
Total
%
Juhel
Hardis
Integrated
Nalin
Nig.
and
Chem.
Ltd
Dromedas
Ind. Ltd
Ltd.
Ltd
FSCL/WAEC
10
10
7
3
3
33
11.6
ND/NCE
18
11
13
9
7
58
20.4
BA/B.Sc/B.Ed
46
34
29
23
14
148
51.2
MA/M.Sc/MBA
13
10
9
5
4
41
14.4
Ph.D
3
1
1
0
0
5
2.4
Total
92
66
59
40
28
285
100
Drugs Paints
From the Table 4.2.4 greater number of the respondents (51.2%) were first
degree holders or its equivalent. This was followed by ND/NCE holders (20.4%).
Master's Degree holders were 14.4% while Ph.D degree holders were 2.4%. The
distribution of the academic qualifications of the respondents is an indication of an
informal citizens.
Table 4.2.5: Number of Years of Service
Variables
CATEGORIES
A.C.
Total
%
Juhel
Hardis
Integrated
Nalin
Nig.
and
Chem.
Ltd
Dromedas
Ind. Ltd
Ltd.
Ltd
2 – 5 years
16
15
19
10
7
67
24
6 – 10 years
14
14
8
6
5
47
16
11 – 15 years
32
15
13
11
8
79
28
16 – 20 years
21
14
11
9
6
6
21
21 – above
9
8
8
4
2
31
11
Total
92
66
59
40
28
285
100
Drugs Paints
Source: Field Survey, 2012.
Table 4.2.5 indicated that 11% of the respondents have served for 21 years
and above; 21% (61 respondent 16 – 20 years; 79 respondents, representing 28% 11 years – 15 years; 47(16%) respondents – 6 years to 10 years; and 67 respondents
(24%) served 6 years to 10 years.
4.3
Analysis of Research Questions
In this section, the research questions were presented and analysed. Also,
questions on the psychographics of the respondents were presented and analysed.
Table 4.3.1:
Respondents'
view
that
entrepreneurship
has
contributed meaningfully to the economic development
of Enugu State.
Details
No of Respondents
Percentage
Strongly Agree
122
42.8
Agree
119
41.8
Disagree
6
2.1
Strongly Disagree
3
1.0
Undecided
35
12.3
Total
285
100
Source: Field Survey, 2012.
From Table 4.3.1 122 of the respondents (42.8%) strongly agree that
entrepreneurship has contributed meaningfully to the economic development of
Enugu State. 119(41.8%) of the respondents merely agree, while 6 respondents
(2.1%) disagree. Three (3) respondents representing 1.0% of the respondents
strongly disagree, while 35(12.3%) of the respondents were undecided. The data,
therefore indicate that entrepreneurship has contributed to economic development of
Enugu State.
Table 4.3.2:
Respondents'
view
that
entrepreneurship
economic development through job creation.
Details
No of Respondents
Percentage
Strongly Agree
176
61.80
Agree
101
35.40
Disagree
1
0.35
Strongly Disagree
1
0.35
Undecided
6
2.10
285
100
Total
Source: Field Survey, 2012.
fosters
In Table 4.3.2 176 of the respondents, representing (61.8%) strongly agree
to the view that entrepreneurship fosters economic development through job
creation. 101(35.40%) merely agree; while 1 respondents each (0.35%) disagree and
strongly disagree. However, 6 respondents (2.10%) were undecided. It can be
deduced, from the above data that there is a strongly link between economic
development, job creation and entrepreneurship.
Table 4.3.3:
Respondents
view
that
entrepreneurship plays
a
significance role in the economic development of Enugu
State.
Details
No of Respondents
Percentage
Strongly Agree
124
43.50
Agree
112
39.3
Disagree
12
4.2
Strongly Disagree
13
4.6
Undecided
24
8.4
Total
285
100
Source: Field Survey, 2012.
From Table 4.3.3 124 (43.50%) of the respondents ticked "strongly agree";
112(39.3%) of them marked "agree" while 12(4.2%) of the respondents sided
"disagree". 13(4.6%) of the respondents strongly disagree; 24(8.4%) of the
respondents were undecided. Therefore, from responses in the above table, this
shows that entrepreneurship play a significance role in economic development of
Enugu State.
Table 4.3.4:
Respondents view that entrepreneurship is imperative in
economic development of Enugu State.
Details
No of Respondents
Percentage
Strongly Agree
134
47.02
Agree
128
44.91
Disagree
1
0.35
Strongly Disagree
1
0.35
Undecided
21
7.37
Total
285
100
Source: Field Survey, 2012.
From table 4.3.4 134(47.02%) of the respondents sided "strongly agree"
128(144.91%) ticked “agree” while I respondent each (0.35%) answered agree and
strongly agree, respectively. Meanwhile, 21(7.37%) of the respondents were
undecided. The argument therefore is that since job creation, economic
empowerment and wealth creation are strong factors of economic development,
which are achieved through entrepreneurship, it is logical to conclude that
entrepreneurship is imperative for economic development.
Table 4.3.5:
Indigenization Policy of 1973 was aimed at Boosting
Entrepreneurship in the country.
Details
No of Respondents
Percentage
Strongly Agree
156
54.7
Agree
116
40.7
Disagree
5
1.8
Strongly Disagree
3
1.0
Undecided
5
1.8
285
100
Total
Source: Field Survey, 2012.
From Table 4.3.1 156 respondents (54.7%) strongly agree that the
indigenization policy of 1973 was aimed at boosting entrepreneurship in the
country. 116 of the respondents (40.7%) agree. Five (5) respondents (1.8%)
disagreed while three (3) of the respondents (10%) strongly disagreed. 5 of the
respondents (1.8%) were undecided. This is explicable on the ground that soon after
the indigenization policy, so many small and medium scale enterprises began to
spraying up.
4.3.6
Respondents view that the indigenization policy afforded
Nigerians the opportunity to float SMEs.
Details
No of Respondents
Percentage
Strongly Agree
143
50.2
Agree
129
45.3
Disagree
3
1.0
Strongly Disagree
4
1.4
Undecided
6
2.1
285
100
Total
Source: Field Survey, 2012.
From Table 4.3.6 143 of the respondents, representing 50.2%, strongly
agreed that the policy afforded Nigerians the opportunity to float small and medium
scale enterprises. 129 respondents, representing 45.3% merely agree while 3
respondents (1.0%) disagreed; 4 respondents (1.4%) strongly disagree. However, 6
respondents, representing 2.1% were undecided.
Since 95.5% of the respondents strongly agree and merely agree, this
suggest that the policy gave rise to SME's.
Table 4.3.7:
Respondents view that the policy has contributed to
entrepreneurship culture.
Details
No of Respondents
Percentage
Strongly Agree
138
48.4
Agree
111
38.9
Disagree
12
4.2
Strongly Disagree
9
3.2
Undecided
15
5.3
Total
285
100
Source: Field Survey, 2012.
Table 4.3.3 reveals that 138(48.4%) strongly agree that the indigenization
policy contributed to entrepreneurship culture. 111(38.9%) of the respondents agree
while 12 respondents, representing (4.2%0 disagree. Nine (9) of the respondents
(3.2%) strongly disagree; 15(5.3%) were undecided. This suggests that the
enterprising spirit and the under to food industries by Nigerians was sparked off by
the policy.
Table 4.3.8:
Respondents views that government's entrepreneurial strategies
have improved entrepreneurial organizations.
Details
No of Respondents
Percentage
Strongly Agree
108
37.90
Agree
92
32.28
Disagree
15
5.26
Strongly Disagree
13
4.56
Undecided
57
20.00
Total
285
100
Source: Field Survey, 2012.
Data in Table 4.3.8 show that 108(37.90%) of the respondents strongly
agree that governments' entrepreneurial strategies have improved entrepreneurial
organization. 92 respondents (32.28) agree while 15(5.26%) of the respondents
(4.56%) strongly agree while 57 respondents (20%) were undecided. Three above
data corroborate the view that some of the incentives given by government to boost
entrepreneurship have improved entrepreneurial organizations. Such government
strategies include; DFIs, NIDB, NACB, NBCI, FMBN, UDB, PBN, IDCs, DFRRI,
NERFUND, NDE etc.
Table 4.3.9:
Respondents' view that entrepreneurial culture can be
facilitated
by
individual,
micro
and
government
encouragement.
Details
No of Respondents
Percentage
Strongly Agree
88
30.9
Agree
103
36.1
Disagree
29
10.2
Strongly Disagree
27
9.5
Undecided
38
13.3
Total
285
100
Source: Field Survey, 2012.
Table 4.3.8 indicates that 99(30.9%) of the respondents strongly agree.
103(36.1%) of them merely agree. 20(10.2%) respondents ticked "disagree", while
27(9.5%) answer "strongly disagree". 38 respondents (13.3%) were undecided. This
shows that for entrepreneurial culture to subsist, individual, micro and government
encouragements must play roles.
Table 4.3.10:
Respondents views that government can facilitate the
development of entrepreneurial culture through the
creation of enabling laws, policies and financial aids.
Details
No of Respondents
Percentage
Strongly Agree
168
59.00
Agree
112
39.2
Disagree
0
0.00
Strongly Disagree
0
0.00
Undecided
5
01.80
285
100
Total
Source: Field Survey, 2012.
In Table 4.3.10 indicate that 168(59%) of the respondents strongly agreed
while 112 (39.2%) of the respondents merely agreed. Also, the data show that no
respondent neither disagreed nor strongly disagreed. Only 5 respondents (01.8%)
were undecided. This therefore suggest that entrepreneurial culture can no doubts be
facilitated by enabling laws, government policies and financial aids.
Table 4.2.11: Respondents
views
that
government
can
also
foster
entrepreneurial development through infrastructural
development.
Details
No of Respondents
Percentage
Strongly Agree
126
44.21
Agree
95
33.33
Disagree
7
2.46
Strongly Disagree
19
6.67
Undecided
38
13.33
Total
285
100
Source: Field Survey, 2012.
From Table 4.3.11 above, 126(44.21%) of the respondents answered
"strongly agree", while 95(33.33%) of then side "agreed". 7 respondents (2.46%)
disagree while 19(6.67%) strongly disagree. Meanwhile 38 respondents (13.33%)
were undecided. The ration of respondents who agree/strongly agree was higher to
the ration who disagree/strongly disagree. This suggests that infrastructure
development such as electricity road network etc. can accelerate entrepreneurial
development.
Table 4.3.12: Respondents views that difficulties in accessing loan is one of the
challenges of entrepreneurial development.
Details
No of Respondents
Percentage
Strongly Agree
118
41.40
Agree
95
33.33
Disagree
9
3.16
Strongly Disagree
6
2.11
Undecided
57
20.00
Total
285
100
Source: Field Survey, 2012.
Table 4.3.12 shows that 118 (41.40%) of the respondents strongly agreed;
95(33.33%) of the agreed; 9(3.16%) disagreed while 6(2.11%) strongly disagreed.
57(20%) of the respondents were undecided. The pre-conditions for accessing
grants and loan by SMEs were cumbersome and posed great challenge to
entrepreneurial development.
Table 4.3.13:
Lack of adequate managerial skills pose great challenge
to entrepreneurship.
Details
No of Respondents
Percentage
Strongly Agree
113
39.65
Agree
77
27.02
Disagree
38
13.33
Strongly Disagree
23
8.07
Undecided
34
11.93
Total
285
100
Source: Field Survey, 2012.
In Table 4.3.13 above, 113(39.65%) of the respondents strongly agree to the
view that lack of adequate managerial skills, also, pose great challenge to
entrepreneurship. 77(27.03%) of the respondents agree while 38(13.33%) of the
respondents disagree. 34(11.93%) of the respondents were undecided. Therefore,
there are strongly indications that this together with other challenges/problems is
responsible for why most SMEs do not survive beyond ten years.
Table 4.3.14:
Respondents view that recognition of viable business
opportunity is one of the problems of entrepreneurship.
Details
No of Respondents
Percentage
Strongly Agree
95
33.33
Agree
75
26.32
Disagree
63
22.11
Strongly Disagree
9
3.16
Undecided
43
15.09
Total
285
100
Source: Field Survey, 2012.
From the data in Table 4.3.14 95 respondents (33.33%) and 75 respondents
(26.32%) strongly agree and disagree, respectively to the view that recognition of
viable business opportunities is one of the problems of entrepreneurship. 63
respondents (22.11%) disagree while 9 respondents (3.16%) strongly disagree.
43(15.08%) of the respondents were undecided. Therefore, from the percentage of
respondents who strongly agree and agree (59.59%), there are indications that some
entrepreneurs do not recognize a viable business venture. They just replicate what
others are doing (e.g. sachet water business).
4.4
Test of Hypotheses
4.4.1
Test of Hypothesis 1
Ho:
There are negative significant roles of entrepreneurship in economic
development of Enugu State.
Hi:
There are positive significant roles of entrepreneurship in economic
development of Enugu State.
To test the above hypothesis, data on table 4.3.3 were used. Therefore, we
construct a 5(5) contingency table as follows:
Table 4.4.1:
Contingency Table for H1.
Categories of
Details
Row
Respondents
Total
Strongly
Agree
Disagree
Agree
Strongly
Undecided
Disagree
Juhel
52
28
5
5
2
92
Hardis and
27
30
3
5
1
66
21
25
2
2
9
59
A.C. Drugs Ltd
14
17
1
1
7
40
Nalin Paints Ltd
10
12
1
0
5
28
Column Total
124
112
12
13
24
285
Dromedas Ltd
Integrated Chem.
Ltd
Operational Assumption
i)
Level of significance
=
0.05
ii)
Degree of freedom (Df)
=
(R - 1) (C - 1)
=
(5 - 1) (5 - 1)
=
4x4
=
16
=
Σ(oi - ei)2
ei
Critical value
X2(0.05,16)
=
7.962
The test statistic
=
X2
Then, the expected frequency is calculated (see appendix II).
Conclusion
Since our X2cal = 33.125 is greater than X2(0.05,16) = 7.962, we, therefore
reject Ho and conclude that there are positive significant roles of entrepreneurship
in economic development of Enugu State.
4.4.2
Test of Hypothesis Two
Ho:
Government policies to an extent do not improve the performance of
entrepreneurial Organization in Enugu state.
Hi:
Government policies to an extent improve the performance of
entrepreneurial Organization in Enugu state.
To test the above hypothesis, the data in table 4.3.7 were used. Therefore,
we construct a 5(5) contingency table thus:
Table 4.4.2:
Contingency Table for H2
Categories of
Details
Row
Respondents
Total
Strongly
Agree
Agree
Disagre
Strongly
Undecide
e
Disagree
d
Juhel
49
29
3
2
9
92
Hardis and
38
21
3
2
2
66
24
29
2
2
2
59
A.C. Drugs Ltd
18
17
2
2
1
40
Nalin Paints Ltd
9
15
2
1
1
28
Column Total
138
111
12
9
15
285
Dromedas Ltd
Integrated
Chem. Ltd
Operational Assumption
i)
Level of significance =
0.05
ii)
Degree of freedom
=
(5 - 1) (5 - 1)
=
4x4
=
16
Critical value
X2(0.05,16)
=
7.962
Then the expected frequency is calculated (see appendix III).
Conclusion
Since the X2cal = 15.965 is greater (>) than X2(0.05,16) = 7.962, we therefore,
reject Ho and conclude that government policies to an extent improve the
performance of entrepreneurial Organization in Enugu state.
4.4.3: Test of Hypothesis Three
Ho:
Macroeconomic policies negatively foster entrepreneurial culture in
economic development of Enugu State.
Hi:
Macroeconomic policies positively foster entrepreneurial culture in
economic development of Enugu State.
To test the above hypothesis, the data on table 4.3.9 were used.
Categories of
Details
Row
Respondents
Total
Strongly
Agree
Disagree
Agree
Strongly
Undecided
Disagree
Juhel
26
30
13
11
12
92
Hardis and
23
26
5
4
8
66
19
22
5
5
8
59
A.C. Drugs Ltd
12
15
3
4
6
40
Nalin Paints Ltd
8
10
3
3
4
28
Column Total
88
103
29
27
38
285
Dromedas Ltd
Integrated
Chem. Ltd
Solution
Ho:
Macro economic policies negatively foster entrepreneurial culture. µ2 = µ3 =
µ4 = µ5
Hi:
Macro economic policies positively foster entrepreneurial culture. i.e. µ are
not all equal.
Using F – test, we have
SST
=
ΣjΣj X2ij
-
SSB
=
ΣjTj 2 r
T2
rk
T2
rk
=
_
SST – SSB or ΣiΣi (Xij – X)2
SST
=
the total sum of squares,
SSB
=
the sum of squares between group variation,
SSE
=
the error sum of squares.
R
=
the number of rows
K
=
the number of columns.
SSE
Where
Let α = 0.05
Since k = 5, r = 5, k - 1= 4, k(r – 1) = 5 (5 – 1) = 20
Where K is the number of columns, r is the number of rows.
F0.05(4,20) = 2.87
From the table, using formula:
SST = ΣiΣiX2ij =
T2
rk
262 + 302 + 132 + 112 + 122 + 232 + 262 + 52 + 42 +
82 + 192 + 222 + 52 + 52 + 82 + 122 + 152 + 32 + 42 +
62 + 82 + 102 + 32 + 32 + 42 - (285)2
5x5
=
4907 - 3249 = 1658
.
. .
SSB
SST = 1658
=
ΣjTi2
r
=
882 + 1032 + 292 + 272 + 382 - (285)2
5x5
=
7744 + 10609 + 841 + 729 + 1444 – 3249
5
-
T2
rk
4273.4 -3249 = 1024.4
.
. .
SSB = 1024.4
SSE
=
SST – SSB
=
1658 – 1024.4 = 633.60
=
633.60
SSE
(ANOVA) TABLE
SV
DF
SS
MS
F
SST
1
-
-
-
SSB
4
1024.40
256.10
8.08
SSE
20
633.60
31.68
Total
24
1658
-
MSB
MSE =
Fcal
.
. .
=
Fcal
SSB =
K–1
1024.40
4
=
256.10
SSE =
K(r-1)
633.60
20
=
31.68
MSB =
MSE
256.10
31.68
=
8.08
=
8.08
Decision Rule
Reject Ho if F-calculated > F0.05(4,20), otherwise accept Ho. Since Fcalculated = 8.08 > F0.05(4,20) = 2.87, we therefore reject Ho and conclude that
macroeconomic policies positively foster entrepreneurial culture in economic
development of Enugu State.
4.4.4
Test of Hypothesis Four
Ho:
Entrepreneurship is not challenged by finances in economic development
of Enugu State.
Hi:
Entrepreneurship is challenged by finances in economic development of
Enugu State.
To test the above table, the F-test was applied using table 4.3.12.
Categories of
Details
Row
Respondents
Total
Agree
Strongly
Disagree
Agree
Strongly
Undecided
Disagree
Juhel
34
35
2
1
20
92
Hardis and
25
24
0
0
17
66
31
12
3
2
11
59
A.C. Drugs Ltd
15
14
3
2
6
40
Nalin Paints Ltd
13
10
1
1
3
28
Column Total
118
95
9
6
57
285
Dromedas Ltd
Integrated
Chem. Nig. Ltd
Using F – test since it involves more than 2 observations, we have
F(k – 1) K(r – 1), α
Let α = 0.05
Since K = 5, r = 5, K – 1 = 4, K(r – 1) = 5 (5 – 1) = 20
Where K is the number of columns, r is the number of rows.
F0.05(4,20) = 2.87
Using the formula:
SST = ΣiΣiX2ij -
=
T2
rk
352 + 342 + 22 + 12 + 202 + 242 + 252 + 02 + 02 +
172 + 122 + 312 + 32 + 22 + 112 + 142 + 152 + 32 + 22 +
62 + 102 + 132 + 12 + 12 + 32 - (285)2
5x5
=
6265 - 3249 = 3016
SST
=
3016
SSB
=
ΣjTi2
r
-
T2
rk
=
952 + 1182 + 92 + 62 + 572 - (285)2
5
5x5
=
5263 - 3249 = 2014
SSB
=
2014
SSE
=
SST – SSB
=
3016 – 2014 = 1002
=
1002
SSE
(ANOVA) TABLE
SV
DF
SS
MS
F
SSµ
1
-
-
-
SSB
4
2014
503.5
10.05
SSE
20
1002
50.1
SST
24
3016
-
MBS =
MSE =
F
.
. .
=
Fcal
SSB =
K–1
2014
4
=
503.5
SSE =
K(r-1)
1002
20
=
50.1
MSB =
MSE
503.5
50.1
=
10.05
= 10.05
Decision Rule
Reject Ho if F calculated > F0.05(4,20), otherwise accept Ho. Since our F
calculated = 10.05 > F0.05(4,20) = 2.87, we therefore reject Ho and conclude that
entrepreneurship is challenged by finances in economic development of Enugu
State.
4.3
Findings and Discussions
4.3.1
To find out the significant role of entrepreneurship in economic
development of Enugu State.
The findings deduced from the survey show that entrepreneurship has great
roles to play in economic development of Enugu State. In fact, at the macroeconomic level, policy formulators and implementations, in any society have always
viewed entrepreneurship and entrepreneurial development as being imperative in
economic development.
In line with the above view points, our findings revealed that
entrepreneurship perform significant role in the economic development of Enugu
State. Table 4.3.3 supported that above hypothesis. The table showed that 124
respondents strongly agree; 112 agreed while 12 respondents and 13 respondents
disagree and strongly disagree respectively. 24 respondents were undecided. The
above data were further subjected to empirical test, applying the chi-square
inferential statistical method. The chi-square calculated of 33.125 was greater than
the table value of 7.962 at 0.05 level of significance and 16 degree of freedom.
4.3.2 To ascertain the extent that government policies have improved the
performance of entrepreneurial organization in Enugu State.
Again, our findings supported the second hypothesis, which stated that
government policies significantly improve the performance of entrepreneurial
organizations. In table 4.3.5 our respondents perceived the indigenization policy of
1973 as being aimed at boosting entrepreneurship in the country, arguing favourably
that the policy has contributed in developing entrepreneurial culture for economic
development. Applying the chi-square goodness of fit, the number two hypothesis
was subjected to empirical test, using table 4.3.7. The empirical test reveal that the
chi-square calculated of 15.965 was greater than the table value of 7.962 at 0.05
level of significance and 16 degree of freedom.
4.3.3 To examine the extent to which macroeconomic policies foster
entrepreneurship culture in economic development of Enugu State.
The third hypothesis stated that macroeconomic policies positively foster
entrepreneurial culture. The data on table 4.3.9 were used to test the validity or
otherwise of the above hypothesis. The table showed that 88 respondents strongly
agreed; 103 respondents agree; 29 disagree; 27 respondents strongly disagree while
38 respondents were undecided. The data was further subjected to empirical test,
using the f-test statistical method. Our result showed that the F-calculated of (8.08)
was greater than F0.05,(4,20) = 2.87. This supported the hypothesis that macro
economic policies positively foster entrepreneurial culture. The truth of this
hypothesis is hinged on the various financial policies of government to boost
entrepreneurship.
4.3.4 To identify the challenges of entrepreneurship in economic
development in Enugu State.
The fourth hypothesis, which stated that entrepreneurship is hindered by lack of
adequate managerial skills and finance, further received empirical support. Also,
applying a F-test statistical analysis, our table value of 2.87 < the value of Fcal of
10.05. This therefore supported the argument widely held that poor management is
one of the major factors that causes business failure. Some entrepreneurs depend on
their personal skills is running their enterprise. They could be skilled artisans but
may not know the basic principles of management. On the other hand, finance also
causes business failures. Some entrepreneurs do not have the financial muzzle to
cope with market competition and expansion. As a result, they their business die
premature death.
REFERENCES
Asika, N. (2009), Research Methodology in the Behavioural Sciences, Lagos:
Longman Nigeria Plc.
Oluwa, O.A. and Aseku, W.A. (2010), Fundamentals of Research, Lagos: Olas
Ventures.
CHAPTER FIVE
SUMMARY OF MAJOR FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1
Summary of Major Findings
Based on an experienced study, the following were the findings of this
research work:
•
There are positive significant roles of entrepreneurship in economic
development of chemicals and pharmaceuticals industry in Enugu State.
•
Government policies to an extent improve the performance of
entrepreneurial Organization in Enugu state.
•
Macroeconomic policies positively foster entrepreneurial culture.
•
Entrepreneurship is challenged by finances in economic development of
Enugu State.
5.2
Conclusion
On the bases of the above findings, and with particular reference to the
theoretical/conceptual underpinnings of the study. The study concluded that
entrepreneurship is sine qua non to economic development. The work also
concluded that, pursuant to the role of entrepreneurship for economic development,
a comprehensive approach to the promotion of entrepreneurship rested on
favourable economic policies entrepreneurial skills/culture and improvement of
entrepreneurial framework condition. Capacity building especially in terms of
business knowledge, self confidence, skills and attitude, acquisition and
development of entrepreneurial spirit , right business motivation and ability to set
the goals are imperatives for entrepreneurial success.
5.3
Recommendations
Based on the major findings above, the following recommendations are made:
•
Government should strengthen the
policies that would improve
entrepreneurship framework conditions. Hence, policy makers should be
able to face the question of how to create and/or improve framework
conditions conducive to entrepreneurial activities and how to ensure that
entrepreneurial skills are allocated to activities adding to the social product.
•
There should be a strict policy framework that can enhance entrepreneursgovernment partnership in area of finance, skill development and alliance.
The Government should establish fiscal incentives and support such as tax
rebate for SMEs which have demonstrated capacities in local source of raw
Materials ,value addition to commodities for export as well as other business
ethics.
•
Government should come up with a new pragmatic and realistic industrial
policy that will address the current globalisation challenges as well as the
emergent domestic challenges in order to make the Nigerian SMEs globally
competitive.
•
Government should priorities the SME sector giving it devoted practical and
Visible attention with the a view to making it virile, vibrant, focused and
productive. SMEDAN should be readily and freely assist prospective
entrepreneurs to have access to necessary information relating to business
opportunity, modern technology, raw materials, market, plant, and
machinery, good and services etc which will enable them to reduce their
operating cost and be more efficient and competitive.
•
In order to complement governments efforts and realize the objective of
revamping SMEs in Nigeria, SME promoters and entrepreneurs should
brace up the challenges posit by environment and also maintain quality in
their good and services and ensure quality control in all product activities at
all levels.
5.4
Contribution to Knowledge
This work has a distinct contribution to the body of existing literature in the
area of entrepreneur and economic development in the Chemicals and
Pharmaceutical industry in Nigeria in general and Enugu in particular, because it
was able to x-ray the prerequisite for maximizing economic growth and wellness.
Secondly it makes vivid the role of entrepreneurs in the economic
development of the Chemicals and Pharmaceutical industry in Enugu state as it
integrates entrepreneur and economic development.
The study concisely positions the economic development as the cenre-focus
of entrepreneurship goal. It x-rays the role of government in an emerging economic
system and the need for proper training of business investor in the area of resources
management, manpower development, and accurate business forecasting and proper
adaptation. Also the frontier thrust of entrepreneurs as owners manager is to
explore the gray areas of economy and increase/profit
5.5
Suggested Areas for Further Studies
•
Future researcher should look at the impact of entrepreneurship in solving
the problem of employment and youth empowerment
•
Future researcher should also look at the contributions of NERFUND to the
development of entrepreneurship in Nigeria.
•
Future research should, further, look at the implications of lack of adequate
managerial skills and lack of access to finances to the longevity or otherwise
of entrepreneurial organizations in Nigeria.
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APPENDIX 1
Department of Management
Faculty of Business Administration
University of Nigeria
Enugu Campus
23rd April 2012.
Dear Respondents
I am a postgraduate student of the above department/institution. I am
carryout a research study on the Role of Entrepreneurship in Economic
Development of Enugu State, Nigeria.
The attached questionnaire is for your perusal and response. Please feel
free to tick good against options of your choice. All information supplied will be
treated with utmost confidence as the exercise is purely an academic research
Thank you.
Yours faithfully,
Nwanah Chizoba Patience
QUESTIONNAIRE
Instruction: In each of the questions below, there are given options and boxes.
Tick √ against any option of your choice in the box provided at the end of each
question.
SECTION A
BIOGRAPHIC
1.
Sex:
a)
b)
2.
[
[
[
[
]
]
]
]
18 – 30yrs
31-40yrs
41-50 yrs
51-above
[
[
[
[
]
]
]
]
Academic qualification
a)
b)
c)
d)
e)
5.
Married
Single
Divorced
Widow
Age
a)
b)
c)
d)
4.
[ ]
[ ]
Marital status:
a)
b)
c)
d)
3.
Male
Female
FLSC/WAEC
ND/NCE
BA/B.Sc/HND
M.Sc/MA/MBA/Med
Ph.D
[
[
[
[
[
]
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[
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[
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How long do you worked in the firm
a)
b)
c)
d)
Less than 1 year
1 – 2 years
4 – 6 years
More than 10 years
PSYCHOGRAPHIC VARIABLE
S/N
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
VARIABLES
To find out the significant role of
entrepreneurship
in
economic
development
of
chemicals
and
pharmaceuticals industry in Enugu
State.
Entrepreneurship
has
contributed
meaningfully
to
the
economic
development of Enugu State.
Entrepreneurship
fosters
economic
development through job creations.
Entrepreneurship plays a significant role
in economic development of Enugu State.
Entrepreneurship can therefore be said to
be imperative in the economic
development of Enugu State.
To
ascertain
the
extent
that
government policies have improved the
performance
of
entrepreneurial
organization in Enugu State.
The indigenization policy of 1973 was
aimed at boosting entrepreneurship in the
country.
The policy has afforded Nigerian the
opportunity to float large and small
medium scale enterprises.
The policy has therefore, contributed in
developing entrepreneurial culture in
Nigeria.
Government entrepreneurial strategies
have
improve
entrepreneurial
organizations.
To examine the extent to which
macroeconomic
policies
foster
entrepreneurship culture in economic
development of Enugu State.
Development of Entrepreneurial culture
can be facilitated by individuals, micro
and government partnership
Government
can
facilitated
the
development
and
sustenance
of
entrepreneurial culture through creation
of enabling laws/polices and financial
aids
Government
can
also
foster
entrepreneurial
culture
through
infrastructure development
A
SA
D
SD
UD
S/N
To
VARIABLES
identify the challenges
entrepreneurship
in
A
of
economic
development in Enugu State.
12.
13.
14.
KEY
A
SA
D
SD
UD
Difficulties in accessing loan facilities is
one of the key challenge of entrepreneur.
Lack of adequate managerial skills, also
pose great challenge to entrepreneurial
culture
At the individual level, recognition of
viable business opportunity is the entry
point to entrepreneurial culture.
=
=
=
=
=
Agreed
Strongly Agreed
Disagree
Strongly Disagreed
Undecided
SA
D
SD
UD
APPENDIX II
EXPECTED FREQUENCY FOR H1
e11
e12
e13
e14
e15
e21
e22
e23
e24
=
92 x 124
285
=
40
=
92 x 112
285
=
36
=
92 x 12
285
=
4
=
92 x 13
285
=
4.2
=
92 x 24
285
=
8
=
66 x 124
285
=
29
=
66 x 112
285
=
26
=
66 x 12
285
=
3
=
66 x 13
285
=
3
e25
e31
e32
e33
e34
e35
e41
e42
e43
e44
=
66 x 24
285
=
6
=
59 x 124
285
=
26
=
59 x 112
285
=
23
=
59 x 12
285
=
3
=
59 x 13
285
=
3
=
59 x 24
285
=
5
=
40 x 124
285
=
17
=
40 x 112
285
=
16
=
40 x 12
285
=
2
=
40 x 13
285
=
2
e45
e51
e52
e53
e54
e55
=
40 x 24
285
=
3
=
40 x 124
285
=
12
=
28 x 112
285
=
11
=
28 x 12
285
=
1.2
=
28 x 13
285
=
1.3
=
28 x 24
285
=
2.4
Chi-Square Table for H1
oi
Ei
oi - ei
(oi – ei)2
(oi - ei)2
ei
52
40
12
144
3.6
28
36
-8
64
1.78
5
4
1
1
0.25
5
42
8
64
0.015
2
8
-6
36
4.5
27
29
-2
4
0.137
30
26
4
16
0.6
3
3
0
0
0
5
3
2
4
1.33
1
6
-5
25
4.16
21
26
-5
25
0.96
25
23
2
4
0.174
2
3
-1
1
0.33
2
3
-1
1
0.33
9
5
4
16
3.2
14
17
-3
9
0.529
17
16
1
1
0.0625
1
2
-1
1
0.5
1
2
-1
1
0.5
7
3
4
16
5.3
10
12
-2
4
0.33
12
11
1
1
0.90
1
1.2
-0.2
0.4
0.33
0
1.3
-1.3
1.69
1.3
5
2.4
2.6
6.76
2.816
33.125
APPENDIX III
EXPECTED FREQUENCY FOR H2
e11
e12
e13
e14
e15
e21
e22
e23
e24
=
92 x 138
285
=
45
=
92 x 111
285
=
36
=
92 x 12
285
=
4
=
92 x 9
285
=
3
=
92 x 15
285
=
5
=
66 x 138
285
=
32
=
66 x 111
285
=
26
=
66 x 12
285
=
3
=
66 x 9
285
=
2
e25
e31
e32
e33
e34
e35
e41
e42
e43
e44
=
66 x 15
285
=
3.5
=
59 x 138
285
=
29
=
59 x 111
285
=
23
=
59 x 12
285
=
2.5
=
59 x 9
285
=
2
=
59 x 15
285
=
3
=
40 x 138
285
=
19.4
=
40 x 111
285
=
16
=
40 x 12
285
=
2
=
40 x 9
285
=
1.3
e45
e51
e52
e53
e54
e55
=
40 x 15
285
=
2
=
28 x 138
285
=
14
=
28 x 111
285
=
11
=
28 x 12
285
=
1.2
=
28 x 9
285
=
0.9
=
28 x 15
285
=
1.5
Chi-Square Table for H2
oi
Ei
oi - ei
(oi – ei)2
(oi - ei)2
ei
49
45
4
16
0.356
29
36
-7
49
1.36
3
4
-1
1
0.25
2
3
-1
1
0.33
9
5
4
16
3.2
38
32
6
36
1.125
21
26
-5
25
0.96
3
3
0
0
0
2
2
0
0
0
2
3.5
-1.5
2.25
0.64
24
29
-5
25
0.862
29
23
6
36
1.565
2
2.5
-0.5
0.25
0
2
2
0
0
0
2
3
-1
1
0.33
18
19.4
-1.4
1.96
0.101
17
16
1
1
0.0625
2
2
0
0
0
2
1.3
0.7
0.49
0.377
1
2
-1
1
0.5
9
14
-5
25
1.786
15
11
4
16
1.455
2
1.2
0.8
0.64
0.53
1
.9
0.1
0.01
0.01
1
1.5
-0.5
0.25
0.167
15.965
INTERVIEW GUIDE
1.
How long has the firm existed?
2.
What is your staff strength?
3.
Are you registered with the small and medium enterprises (SME)?
4.
What is your market share of chemical industries?
5.
How has your firm been contributing to the economic development of
Enugu State?
6.
Do you have any challenge in industrial expansion?
7.
What are your greatest challenges?
8.
How have you been overcoming these challenges?
9.
Any other input.