EFFECT OF ENTREPRENEURIAL SELF-EFFICACY SUCCESS OF SMES FIRMS IN MAKURDI TOWN BENUE STATE.

CHAPTER ONE INTRODUCTION It is virtually axiomatic those small and medium enterprises (SMEs) are critical to any country's growth and that their contribution to economic independence is unavoidable. By absorbing unemployment and encouraging innovation, a strong SME sector greatly aids any economy's upward development. In terms of economic development, SMEs are the country's backbone. SMEs are essential not just in rich countries, but also in emerging countries. SMEs are critical for economic wealth, according to Ayagari, Demirguc-Kunt, and Maksimovic (2011), especially in low-income areas. The impact of entrepreneurs' self-efficacy on business success has long been studied. Because entrepreneurs have such a significant role in business behaviour and practices, self-efficacy is expected to play a significant part in explaining why and how companies behave unequally. Self-efficacy is a mental concept that expresses a person's belief in their own capacity to complete tasks. Self-efficacy has been demonstrated to impact a wide variety of cognition and behaviour in people. Self-efficacy, for example, is linked to higher expectations and objectives, enhanced work performance, increased job search activity, improved academic achievement, and health-related decisions. Self-efficacy can be task-specific, generic, or connected to several related activities within a domain. We focus on entrepreneurial self- efficacy in this study, which refers to an individual's belief in their capacity to do tasks in the domains of entrepreneurship and venture capital. Because “self-efficacy concerns people's views in their ability to mobilise the motivation, cognitive resources, and course of action needed to exert control over events in their lives,” it is crucial for entrepreneurs. The founder's self-efficacy is critical to the success of the company. Self-efficacy, according to Maddox and Sherer (1982), is divided into two categories: general self-efficacy and social self-efficacy. For an entrepreneur, self-efficacy is equally essential since it indicates the entrepreneur‟s conviction in his/her capacity to complete various business tasks. Entrepreneurs that have high self- efficacy set difficult objectives, invest in entrepreneurial tasks, recover quickly from failure, and show tenacity, according to Trevelyan (2011). As a result, it's critical to investigate the impact of self-efficacy on company success. For an entrepreneur, ensuring the success of his or her company is crucial. A firm‟s performance is key for the firm‟s success. The performance is mostly measured by three indicators: Growth, profitability, and firm success (Cant & Wiid 2013). Because entrepreneurs are the driving force behind SMEs, their role is critical to their success and growth. Their importance has grown in the unpredictable settings of emerging nations like Nigeria, which are characterised by several restrictions. These entrepreneurs should be able to bounce back in the face of unexpected political, economic, and legal events. In light of this, it's critical to investigate if there are any unique traits that make entrepreneurs more resilient in such situations. In attempts to explain entrepreneurship behaviour in the new global economy, creativity has become a major topic. This connection relies on Schumpeter's (1934) depiction of entrepreneurship as being driven by creativity and invention. Idea generation, opportunity recognition, the development of new goods and services, and the foundation of new corporate organisations are all ascribed to creativity (Cant & Wiid 2013). Given the prevalence of young formal unemployment, poverty, and social inequity in such situations, creativity, through its effect on entrepreneurial behaviour, may have a bigger role to play in Nigeria. Scholars (Asah, Fatoki, and Rungani 2015) think that entrepreneurship has the potential to be one of the strategic answers to the country's "triple problems" of poverty, unemployment, and social inequality. It is hypothesized that innovation underpins the creation of new enterprises, which will, in turn, need the use of skilled labour. Simultaneously, it encourages the development and introduction of novel goods in established firms, therefore improving their competitive edge and growth potential. As a result, entrepreneurial people' innovation is a major contributor to economic growth, consumer product diversification, job creation, and industry and business transformation (Ferreira et al. 2017). In the end, creativity provides countries with the tools they need to minimise the impacts of the socioeconomic difficulties they face. Furthermore, accumulating environmentally appropriate technology and talent inventories increases the chance of firm survival (Rambe, Ndofirepi & Dzansi 2015). However, in compared to other Sub-Saharan African nations, empirical entrepreneurial activity among South Africa's adult population is substantially lower (Herrington, Kew & Mwanga 2017). Innovativeness is critical to a firm's success; innovativeness strikes not at the edges of revenues and outputs, but at the fundamental foundations and life of current businesses. “Under capitalism, inventive activity becomes obligatory, a life-and-death matter for the company, and innovation has supplanted pricing as the name of the game in a number of major industries,” writes Baumol (2002). Innovativeness is important for all sorts of businesses, both new and old. Innovation is a strong tool for new businesses to join the market and challenge established businesses. In addition, existing businesses must innovate to be competitive in the face of new and emerging (or "disruptive") technology (Christensen, 1997). Innovativeness is critical for success, not just for new businesses launching new goods or entering new markets, but also for established businesses that must constantly innovate to avoid being disrupted by new technology (Christensen, 1997). According to Banbury and Mitchell (2005), incumbent businesses that bring incremental breakthroughs more regularly and are able to sustain them in the market have a higher chance of success in the established sector of cardiac peacemakers. 1.2 Statement of the Problem Only 20% of SMEs survive for more than eight years. In comparison to their western counterparts, this success percentage is lower. More than half of firms in European nations survive after five years (European Union, 2012). In Nigeria, the majority of new small-scale businesses do not make it through the success stage (Olawale and Garwe, 2010). Estrin and Mickiewicz (2011) reiterated this concern, claiming that entrepreneurship and SME formation are still lower in transition economies like Nigeria than in other developing nations, despite the fact that the country has been democratic for more than 59 years. Small business owners and managers still face several problems, including expansion, management, and business practices. Furthermore, according to Roper and Hart (2013), strong growth in SMEs is frequently episodic and not sustainable. Small rural companies, according to Dzansi (2016), have not contributed as much as they could have since they do not develop in terms of output or employment capacity. In comparison to large-scale companies, their contribution to GDP is critical for emerging countries. This sector accounts for more than seventy-five percent of gross domestic output in most Asian nations. Furthermore, a high-performing SME sector accelerates the rate of transition from the underdeveloped to the developed stage. However, many developing nations, particularly Nigeria, confront several challenges in this industry, including a lack of technology, a lack of management and entrepreneurial skills, a lack of current market intelligence, and poor product and service quality. 1.3 Objective to the study The general purpose of the study is to determine the relationship between self-efficacy and firm success of SMEs in Makurdi, Benue state. However, the objectives of the study are to; i. Determine the relationship between creativity and Firm Success of selected SMEs in Makurdi ii. Examine the relationship between innovativeness and Firm Success of selected in Makurdi iii. Determine the relationship between risk- taking propensity and Firm Success of selected SMEs in Makurdi 1.4 Research Questions The study will provide answers to the following research questions: i. To what extent does creativity relate to Firm Success of selected SMEs in Makurdi ? ii. To what extent does innovativeness relate to Firm Success of selected SMEs in Makurdi? iii. To what extent does risk taking propensity relate to Firm Success of selected SMEs in Makurdi ? 1.5 Statement of Hypotheses The following null hypotheses (HO) will be tested by the study: HO1: There is no significant relationship between creativity and Firm Success of selected SMEs in Makurdi. HO2: There is no significant relationship between innovativeness and Firm Success of selected SMEs in Makurdi. HO3: There is no significant relationship between risk taking propensity and Firm Success of selected SMEs in Makurdi. 1.6 Significance of the Study This study seeks to provide some significant insights that suggests that it is the existence of entrepreneurial self-efficacy that contribute to good performance of Small and medium enterprises in Benue State-Nigeria. It also seeks to understand the role entrepreneurial self-efficacy in stimulating performance of small businesses in Benue State- Nigeria. The insights are meant to create an understanding to the policy makers, practitioners and other stakeholders on the need to promote self- efficacy mindset and create the infrastructure necessary so that the manifestation of entrepreneurial self- efficacy. The findings will challenge the stakeholders, policy makers and practitioners to strategize to promote the entrepreneurial mindset in their organizations for good performance. Besides, the findings of this study will enrich the major stakeholders in the SMEs sub-sector: entrepreneurs, business operators, managers and employees by enlightening them as to the roles and benefits of entrepreneurial self-efficacy in the success of SMEs. The result of the work shall enable the management of SMEs to understand the effects of entrepreneurial self-efficacy on organizational performance particularly during period of economic uncertainty. Hence identify area where improvement can be done. This study will go a long way in providing relevant information to the government and policy makers in the formulation of better policies relating to fostering and development of SMEs. Furthermore, this study will also contribute significantly to the existing stock of knowledge in the entrepreneurship and management literatures, particularly in the Small and Medium Enterprises (SMEs) sub-sector in Benue State- Nigeria. The findings will provide reliable empirical results that can be useful to academics as well as practitioners, thus: Researchers and academia. At universities and other institutions of learning that conduct research, the study findings will contribute to the pool of additional entrepreneurship literature especially on entrepreneurial self-efficacy and the firm‟s success The research findings will improve the common understanding of the relationship between entrepreneurial self-efficacy and firms success thereby adding value or insight to the existing scientific body of knowledge. Entrepreneurs. At the enterprise level, this study may sensitize entrepreneurs and owners/ managers of Small and medium Enterprises in Benue State to understand the significance of entrepreneurial self- efficacy to performance of their enterprises. The Small medium Enterprises may thus improve their entrepreneurial self-efficacy in order to confront challenges and exploit opportunities to achieve growth and business sustainability. Policy makers. Small businesses enterprises are the biggest supplier of employment in most nations, mostly of new jobs and are a major source of technological creativity and innovation and new products and services. Small enterprises have proved to possess the potential to contribute greatly to a national economy and can provide a strong and stable foundation for the growth and development of new industries as well as strengthening existing ones. Therefore, the outcome of this research will provide government and other policy and law makers with information that can be used as inputs for policy development regarding entrepreneurship self-efficacy and performance of SMEs. 1.7 Scope of the Study The study seeks to investigate the relationship between entrepreneurial self-efficacy and firm successes in Makurdi Benue State-Nigeria. The study will focus on only owners/ managers of SMBs in the study area because as CEOs of their respective enterprises, they are presumed to be more knowledgeable and are also in a better position to provide information on how their entrepreneurial self-efficacy affect firm success of their enterprises in terms of sales growth, market share, competitive advantage, and customer satisfaction. 1.8 Operational Definition of Terms Entrepreneurial self-efficacy: it consists of contemplation of tasks related to the beginning and development of new enterprises in the case of entrepreneurship. Innovativeness: This refers to organizational willingness and a tendency to achieve the desired innovation demonstrated in terms of behaviors, strategies, activities and processes. Risk taking propensity: Risk taking propensity is conceptualized in this proposed study to mean an entrepreneur‟s tendency to take bold actions such as venturing into unknown new markets and committing a large portion of resources to ventures with uncertain outcomes. Performance: This is a measure of how effective and efficient an organization is in achieving its objectives. It is a measure of actual outputs or results of organizations against their intended outputs Firm success: It may be assessed in a variety of ways and using a variety of methodologies; however, financial studies that utilize profitability ratios as important metrics of a firm's overall efficiency and performance are one of the most commonly used methods.