smes key failure-factors: a comparison between the united kingdom and nigeria

8/14/2019 SMEs Key Failure-Factors: A Comparison between the United Kingdom and Nigeria

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INTRODUCTION

Since the 1960s to date, small and medium-sized enterprises (SMEs) have been given duerecognitions especially in the developed nationsfor playing very important roles towards fosteringaccelerated economic growth, development andstability within several economies. They make-up

the largest proportion of businesses all over theworld and play tremendous roles in employmentgeneration, provision of goods and services,creating a better standard of living, as well asimmensely contributing to the gross domesticproducts (GDPs) of many countries (OECD 2000).Over the last few decades, the contributions of theSMEs sector the development of the largesteconomies in the world have beamed the search-light on the uniqueness of the SMEs, and this havesucceeded in overruling previously held views thatSMEs were only miniature versions of largercompanies (Al-Shaikh 1998; Gaskill et al. 1993).

However, it appears that considering the

enormous potentials of the SMEs sector, anddespite the acknowledgement of its immense

Kamla-Raj 0000 J. Soc. Sci., 00(0): 000-000 (0000)

SMEs Key Failure-Factors:

A Comparison between the United Kingdom and Nigeria

Ugwushi Bellema Ihua

University of Central England, Birmingham United Kingdom, UCE Business School, Perry BarrBirmingham UK, B42 2SU

KEYWORDS Small and Medium-Sized Enterprises (SMES). Business Failures. Economic Conditions. Social Support

ABSTRACT To comparatively examine the individual impact of ten key factors influencing business failure withinthe small and medium-sized enterprises (SMEs) sector between the United Kingdom (UK) and Nigeria. A surveyinstrument testing ten key variables was developed and data was generated by sampling key informants. Forty fivequestionnaires each were administered and two interviews each were conducted between the UK and Nigeria. Theresults showed that while poor management was found to be the most crucial factor influencing to SMEs failure in theUK, poor economic conditions and infrastructural inadequacy were found to be most crucial factors in Nigeria.Relevant statistical analyses undertaken led to the rejection of the two hypotheses of the study. This study adopted

a survey sampling of key informants due the short time frame for conducting the study; hence limiting the ability ofthe results to be generalised. The results of this study reveal that internal factors are responsible for SMEs failures inthe UK. Hence more effort needs to be focused in the area of management development for SMEs. External factorswere found to be the key factor influencing SMEs failure in Nigeria; hence a lot needs to be done in Nigeria in termsof improving the economic conditions and the dilapidated state of infrastructural and social support. This studyattempts to fill the gap in comparative studies on factors influencing SMEs failure between the UK and Nigeria.

contribution to sustainable economic develop-ment, its performance still falls below expectationin many developing countries (Arinaitwe 2006).This is because the sector in these developingcountries are been bedevilled by several factorsmilitating against its performance, and leading toan increase in the rate of SMEs failure. Thesefactors include the unfavourable and very harsh

economic conditions resulting from unstablegovernment policies; gross undercapitalisation,strained by the difficulty in accessing credits frombanks and other financial institutions;inadequacies resulting from the highly dilapidatedstate of Infrastructural facilities; astronomicallyhigh operating costs; lack of transparency andcorruption; and the lack of interest and lastingsupport for the SMEs sector by governmentauthorities, to mention a few (Oboh 2002; Okpara2000; Wale-Awe 2000).

A careful examination of several studies onfactors influencing SMEs failure reveal that mostof them are mainly independently conducted

studies. They tend to simply identify the factorsinfluencing business failures in SMEs andbusinesses in general, and attaching percentagerates to the extent at which these factors werefound to influence failure (Dun and Bradstreet1969; Altman 1971; Argenti 1976). This is becausemost of the studies tend to focus on SMEs inAmerica and other developed countries (Peterson

JSS-708

Address for correspondence:Ugwushi Bellema IhuaKent Business School, University of KentCanterbury Kent, United Kingdom CT2 7PETelephone: +44(0)7707312723

E-mail: [email protected]


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2 UGWUSHI BELLEMA IHUA

et al. 1983; Theng and Boon 1996). There appearsto be inadequacy in comparative studies on the

factors influencing SMEs failure between thedeveloped and developing nations, and even ifthere are a few, not much has been done betweenthe UK and Nigeria. This study attempts to fillthis gap. In addition, despite the fact that severalresearch studies have identified a number ofgeneric factors influencing SMEs failure, it wouldstill seem inappropriate to assume that the sameset of factors would lead to business failure indifferent regions and countries. In addition, wouldalso seem inappropriate to assume that the impactof these factors on SMEs failure will be the samein both the UK and Nigeria. As such empiricalwork needs to be conducted.

In this study, the researcher tried to exploreten key factors i.e. those factors that havemostly been found from researches and cited asthe main factors influencing SMEs failure; withthe aim of evaluating their individual impact onthe failure of SMEs. This study compares theresults of this examination between the UnitedKingdom (UK) and Nigeria; and also identifieswhich factor(s) are most crucial to the countries.The study should be helpful to small businessconsultants, policy planners and governmentagencies that need to gain a better understandinginto the main problems facing SMEs in thesecountries. It should also bring about insightsinto the needed support for the SMEs sector.

Business failure within the SMEs Sector

Wherever a business goes burst, bankrupt orfails there is always a resultant negative impacton most, if not all, of the stakeholders of thebusiness. Entrepreneurs lose their capitalinvestments, employees lose their jobs, thesociety loses a means of the production anddistribution of goods and services, thegovernment loses the revenue it would haveearned from tax. It also reduces the standards ofliving of individuals and brings about thedeprivation of goods and services. The impact

of business failure is always overbearing and thisis why the issue is attended to with great concern.Over the years, the have been several

definitions of business failure and a number oftheories and thoughts on what constitutes a failedbusiness. There are some scholars who viewbusiness failure as discontinuance of businessfor any reason, such as Fredland and Morris

(1976). There are others who view failure asbankruptcy and the most cited work in this

school of thought is Dun and Bradstreet (1969)and their definition of failure as:

those businesses that cease operationsfollowing assignment or bankruptcy; ceased withloss to creditors after such actions as execution,foreclosure or attachment, voluntarily withdrewleaving unpaid obligations; were involved in courtactions such as receivership, reorganization orarrangement, or voluntarily compromised withcreditors (Watson and Everet, 1996 p. 47).

Other views of failure include businessesdisposed of to prevent further losses andfailing to make a go of it. (Watson and Everett1996). Irrespective of the size of any business-

large, medium or small, several researches andstatistics appear to have ranked poor managementor management inability the main cause ofbusiness failure in general (Argenti 1976; Dunand Bradstreet 1969; Wichmann 1983 amongstother). Therefore the primary hypothesis to betested in this study is as follows:

H1 Poor Management is the Most CrucialFactor Influencing SMEs Failure in both the UKand Nigeria.

The SMEs Sector in the United Kingdomversus Nigeria

In both the UK and Nigeria, the SMEs sector

constitutes the largest proportion of the entirebusinesses. In the UK SMEs represent over 95percent of all businesses and contribute over 65percent of the labour force as well as over 30percent of the GDP (Day 2000; Dewhurst andBurns 1993). Likewise, In Nigeria, data the FederalOffice of Statistics reveal that about 97 percentof the entire enterprises are SMEs and theyemploy an average of 50 percent of the workingpopulation as well as contributing up to 50 percentto the countries industrial output. It has evenbeen suggested that SMEs in Nigeria are thecatalysts of economic growth and development,as well as the backbone of the nation (Ariyo 1999;

Ihua 2005). However, irrespective of thesesimilarities in economic statistics relating to SMEs,the sector in Nigeria grossly under performs itspotentials when compared with its UKcounterparts. Ariyo (1999) suggested that thedifference lies in the importance ascribed to thesector in both countries, pointing that while thesector not only forms the bedrock of the economy


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3SMEs KEY FAILURE-FACTORS

in UK, there is also an age-long, generallyacceptability that it is the hub of economic

activities in the country. However, in Nigeria, theissue of the SMEs sector and its developmenthave been handled with levity by previousgovernments.

Politically speaking, there appears to be morebacking for SMEs in the UK. The Tony Blair ledgovernments 2006 budget report attests to thistruth. The policies include: building an enterpriseculture; encouraging a more dynamic start-upmarket; building the capability for small businessgrowth; improving access to finance for smallbusinesses, and enterprise for all amongst others(SBS 2006). On the other hand, while previousgovernments in Nigeria appear to have neglected

the SMEs sector, the present administration ledby Olusegun Obasanjo have been making severalefforts directed to developing and improving theperformance of the sector. These include theintroduction the National EconomicEmpowerment and Development Strategy(NEEDS); the National Poverty EradicationProgramme (NAPEP); the Small and MediumEnterprises Development Agency of Nigeria(SMEDAN), to replicate the duties of the SmallBusiness Service (SBS) in the UK and the SmallBusiness Agency (SBA) in USA; and theintroduction of the Small and Medium EnterprisesEquity Investment Scheme (SMEEIS), amongstothers. Nevertheless, much of the potentials of

the SMEs sector are yet to be tapped in thecountry.

Furthermore, a look from the socio-economicperspective on the SMEs sector reveals severaldifferences in several indices that affect itsperformance in both countries. While the UnitedKingdom on one hand is regarded as a developednation, Nigeria on the other is considered adeveloping nation. Ihua (2005) noted that withan exchange rate of 1 to about N250 Nigerianand an inflation rate 2.2 percent in UK and about28 percent in Nigeria, these differences ineconomic indices would definitely impact on theperformance of sector. There is no doubt that a

wide gap exists technologically between the UKand the Nigeria. The UK being a developed nationis technologically more advanced than Nigeria.Al-Shaikh (1998) gave an insight to why this gapexists. He noted that the technologicalenvironment and the infrastructure of developingcountries are still lagging behind the WesternCountries, probably because the developed

nations produce the technology, while thedeveloping nations import it. He further

emphasized that even though globalization seemsto make the importation of such technology lesscumbersome, most SMEs in these developingcountries (such as Nigeria) still lack the financialwherewithal to acquire the technology. In theUK, there exists adequate infrastructural support,and the government is committed to doing more.However, in Nigeria the situation is not the sameas infrastructural inadequacy has been identifiedas a key constraint to private sector development(Adenikinju 2005).

In addition, the problems of inconsistenteconomic policies, insecurity and corruption alsocharacterises the peculiar dilemmas experienced

by the sector in Nigeria (Ariyo 1999; Onakuse2004; WaleAwe 2000). Also, Dike (2005) stressedthat the issue of corruption is a globalphenomenon and not peculiar to Nigeria alone;nevertheless, the case of corruption in Nigeria ispandemic. Therefore the secondaryhypothesis to be tested in this study is as follows:

H2 There is a significant difference in theImpact of Key Factors Influencing SMEs Failurebetween the United Kingdom and Nigeria.

METHODOLOGY

This paper is the product of a dissertationsubmitted by the writer at the UCE Business

School, Birmingham, UK in partial fulfilment ofthe award of the degree, Master of BusinessManagement. The primary data for this studywas gathered from a combination of surveyquestionnaires and semi-structured interviews ofkey informants. While the survey questionnairesaided the examination of the impact of theindividual variables i.e. key factors influencingSMEs failure in both countries as well as test thehypotheses of the study; the exploratorytechnique i.e. the use of semi-structure interviewswith key informants aided the analyses of theresponses from the questionnaires.

The survey questionnaire was chosen

because it enhanced the translation of theresearch objectives into specific questions thatwere asked to the respondents; standardisationof the questions in a way that participantsrespond to identical stimuli; the crafting of thequestions in a way that fosters the respondentscooperation and keeps respondents motivatedto answer all the questions; and it serves as a


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permanent record for the research. The semi-structured interview technique was also chosen

because of its the ability to generate in-depthamount of data and insights for the researcher;its flexibility depending on the research topic,unlike the questionnaire which is static; datagenerated can be checked for reliability, validityand accuracy; and its a good method ofproducing data based on key informant opinions,ideas and experiences, which this research is allabout. By triangulating, i.e. using severaltechniques to generate the primary data, theresearcher tried to leverage on the strengths ofboth methods in order to complement theweaknesses of each other (Saunders et al. 2003).Jankowicz (2005, p.390) suggested that

triangulation is useful in all cases and it helps thestudy to ensure that the data are telling youwhat you think they are telling you.

The questionnaire was divided into twosections, A and B. While section A was meant fordescriptive purposes and profiles of therespondent. It was also to test their understandingof SMEs in terms of number of employees. SectionB consisted of the critical questions examining thevariables. The researcher also pre-coded thequestionnaires sent out with the codes: QUK01-QUK45 for the set of questionnaires to beadministered in the UK and QNG01-QNG45 for theset to be administered in Nigeria. This was doneto track the questionnaires and measure the

response rate. The questionnaires were later re-coded as UK01-UK35 and NG01-NG30 when theywere returned back to the researcher. Thequestionnaire responses were scored and codifiedas follows: Not At all= 1; To a Little Extent= 2; Toan Average Extent= 3; To a Large Extent= 4; To aVery Large Extent= 5; and Strongly Disagree= 1;Disagree= 2; Neutral= 3; Agree= 4; and StronglyAgree= 5.

The semi-structured interview on the otherhand was divided into five parts consisting of anintroduction, i.e. greetings and appreciations tothe interviewees, assuring them of theirconfidentiality, asking for permission to record

the interview and giving them backgroundinformation about the study; warm-up/generalquestions, meant to inquire into the backgroundof the interviewees, derive a brief view into theirknowledge of the field of SMEs and their opinionof what constitutes a failed business; criticalquestions, meant to investigate the factors orvariables of this study; reflective questions, meant

to clarify and tie up the opinions expressed bythe interviewees and round up the interview

sessions as well; and a conclusion, consisting offinal thanks and asking for the permission to callthem in future to clarify their opinions on certainissues where necessary.

Sampling Technique, Pre-pilot and Pilot tests

The researcher adopted a purposive samplingtechnique for generating the primary data.Jankowicz (2005, p.203) suggested that it involvesselecting people whose views are relevant,important and particularly worth obtaining to theresearch; i.e. the key informant technique ofselecting people with specialised knowledge and

selections by taking slices through the organi-sation is instances of purposeful sampling.This technique was adopted because of the

nature of data required. Watson and Everett (1996,p.52), suggested that the lack of reliable data is amajor difficulty in studying small business, statingthat once a small business has ceased operating,information concerning the business becomesdifficult to obtain. Jankowicz (2005) also notedthat where there is difficulty of accessing data,the non-probability method is more suitable. Inaddition, time constraint in submitting thedissertation as well as the inadequacy of financialresources on the part of the researcher wasanother reason for adopting this technique. In

addition, Saunders et al. (2003) suggested thatlimited resources may dictate the use of the non-probability methods of primary data collection.

Sample Characteristics and Profile of theParticipants

Saunders et al. (2003), suggested that aminimum number of thirty (30) for statisticalanalyses provide a useful rule of thumb.Nevertheless, the researcher chose a sample sizeof forty-five (45) questionnaires each betweenthe UK and Nigeria and conducted two (2) semi-structured interviews each between the UK and

Nigeria. The interviews conducted in the UK werebe on a one-to-one, face-to-face basis; while oneof the interviews with a Nigerian Key interviewwas conducted on a one-to-one, face-to-facebasis and the other was a telephone interview.The researcher adopted a five percent (5%)sampling error in the study.

Out the forty-five (45) questionnaires


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administered each in the UK and Nigeria, thirty-five (35) was returned in the UK and thirty (30)

returned from Nigeria. This represents a responserate of approximately seventy eight (78) percentand sixty seven (67) percent for the UK andNigeria respectively. The profiles of therespondents as seen in Table 1 shows that 11percent, 26 percent, 29 percent and 34 percent ofthe respondents in the UK were small businessadvisors/management consultants, venturecapitalists/business angels, bankers/financialconsultants and auditors respectively; and therespondents in Nigeria represented 27 percent,23 percent, 43 percent and 7 percent respectively.

For the interviewees in UK, the first one wasthe partner of a management consulting firm and

the other was a chartered accountant and themanaging partner of a chartered accounting firm.For the interviews in Nigeria, the first one wasthe MD of a venture capital company and theother was a manager with the Central Bank ofNigeria (CBN).

Variables and Key Factors

Disasters and Crises: This variable wasmeasured with the question: Do you agree thatDisasters and Crises lead to SMEs failure in yourcountry? and the response showed that total of43 percent each of the respondents disagree andare neutral that disasters and crises significantly

impacts on SMEs failure in the UK, a total of 70percent agree that it significantly impacts onSMEs failure in Nigeria. This position is supportedup in the UK by the interviewees UK 01 and 02.However, interviewees NG 01 and 02 did notsupport the position of the questionnairerespondents that disaster and crises significantlyimpacts SMEs failure in Nigeria. Interviewee NG01 suggested that Nigeria has been blessed fornot having natural disasters such as earthquakesand Tsunamis, but the country suffered fromhuman disaster i.e. embezzlers of funds and some

corrupt entrepreneurs. In support, intervieweeNG 02 stated that although the activities of militia

groups and pockets of ethnic violence aroundthe country tend to militate against the survivaland existence of SMEs; nevertheless, it cannotbe said to be a key factor to SMEs failure inNigeria.

Fierce Market Competition: This variablewas measured with the question: To what extentdoes fierce market competition leads to SMEsfailure in your country? and the results showedthat in the UK, 40 percent of the respondentschose it was to an average extent, while 57 percentchose it was to a large extent. On the other hand,the result appears similar as 40 percent and 50percent chose to an average extent and large

extent respectively. This implies that in both theUK and Nigeria, about half of the respondentsfeel that competition is one of the crucial factorsinfluencing SMEs failure while the other 50percent consider competition to be of an averageextent.

Infrastructural Inadequacy and lack ofSocial Support: This variable was measured withthe question: To what extent does infrastructuralinadequacy and lack of social support lead toSMEs failure in your country? and the resultsrevealed that 60 percent of the UK respondentschose a little extent and 29 percent chose anaverage extent. In Nigeria, 27 percent chose to alarge extent and 60 percent chose to a very large

extent. This implies that infrastructuralinadequacy is considered very minimal in the UK;it is seen as a very crucial factor influencing SMEsfailure.

Multiple and High Taxes: This variable wasmeasured with the question: To what extent doesMultiple and High Taxes lead to SMEs failure inyour country? and the results showed that 40percent and 50 percent of the UK respondentschose a little and an average extent respectively.However, in Nigeria, 37 percent, 23 percent and33 percent of the respondent chose a little extent,

Table 1: Profile of the respondents

United Kingdom Nigeria

Responses Frequency Percentage Frequency Percentage

Small Business Advisor/Management Consultant 4 11% 8 27%Venture Capitalists/Business Angel 9 26% 7 23%Banker/Financial Consultant 10 29% 13 43%Auditor 12 34% 2 7%Total 35 100% 30 100%


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an average extent and a large extent respectively.What this implies is that while the UK respondents

do not really consider multiple or high taxes asbeing very significant to SMEs failure; but inNigeria, it is considered to a certain extent.

Poor Accounting and Book-KeepingPractices: This variable was measured with thequestion: Do you agree that Poor Accountingand Book Keeping practices lead to SMEs failurein your country? and the results showed that 68percent and 57 percent of the respondents in theUK and Nigeria respectively agreed that itinfluenced SMEs failure. This reflects that in bothcountries, the respondents quite agree that pooraccounting and book-keeping practicesinfluenced SMEs failure.

Management Inability: This variable wasmeasured by the question: To what extent doesManagement Inability or Inefficiency lead toSMEs failure in your country? and the resultsshowed that 17 percent and 77 percent of the UKrespondents chose large extent and very largeextent respectively. In Nigeria, 47 percent and 44percent of the respondents chose large extentand very large extent respectively. This clearlyimplies that in both countries, poor managementis seen as a very crucial factor influencing SMEsfailure. However, it can be said that this variableis more considered in the UK than in Nigeria, as77 percent of the UK respondents chose verylarge extent as against Nigerias 44 percent.

Poor Marketing and Sales Efforts: Thisvariable was measured by the question: Do youagree that Poor Marketing and Sales Efforts leadto SMEs failure in your country? and the resultsshowed that 69 percent and 70 percent of therespondents in the UK and Nigeria respectivelyagree that poor marketing and sales effortsinfluences SMEs failure. This implies that in bothcountries this variable is significantly consideredas a major factor influencing business failures inthe SMEs sector.

Poor Economic Conditions: This variablewas measured with the question: To what extentdoes Poor Economic Conditions lead to SMEs

failure in your country? and the results showedthat 48 percent and 23 percent of the UKrespondents chose an average extent and a largeextent respectively. On the other hand, 23 percentand 60 percent of the respondents in Nigeriachose a large extent and a very large extent. Theimplication of this is that in Nigeria, poor economicconditions is considered as a very significant

factor influencing SMEs failure; while it is notconsidered significant in the UK.

Improper and Poor Planning : This variablewas measured with the question: Do you agreethat improper and poor planning lead to SMEsfailure in your country? and the results showedthat 83 percent and 11 percent of the UKrespondents chose agree and strongly agreerespectively. However, the 50 percent and 33percent of the Nigerian respondents chose agreeand strongly agree respectively. This implies thatin both countries, improper and poor planning isconsidered as a significant factor influencingSMEs failure.

Financial Problems: This variable wasmeasured with the question: To what extent do

financial problems lead to SMEs failure in yourcountry? and the results revealed that 31 percentand 51 percent of the UK respondents chose alarge extent and a very large extent respectively.Similarly, 50 percent and 37 percent of therespondents in Nigeria chose a large extent and avery large extent respectively. This clearly impliesthat in both countries, the financial problem ofundercapitalisation is considered as a verysignificant factors influencing SMEs failure.

Test of Hypotheses

The primary hypothesis (H1) was tested withthe question: Which of these factor(s) do you

consider the most crucial factor influencing SMEsfailure in your country? and the results revealedthat in the UK 37 percent and 21 percent of therespondents selected poor management andfinancial problems respectively. On the otherhand, in Nigeria, 35 percent and 23 percent of therespondents selected poor economic conditionsand infrastructural inadequacy respectively as themost crucial factors influencing SMEs failure. Thisis represented in the pie charts below:

The results revealed in Figures 1 and 2 areclearly not consistent with the primary hypothesisof this research which suggested that poormanagement is the most crucial factor influencing

SMEs failure in both the United Kingdom andNigeria. This is because while Figure 1 revealedthat poor management was chosen as the mostcrucial factor in the UK, Figure 2 on the otherhand revealed that the respondents in Nigeriaare of the opinion that poor economic conditionsis the most crucial factor in Nigeria. Hence theprimary hypothesis is rejected.


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Fig. 1. Key factors influencing SMEs failure in the United Kingdom

Uni ted K ingdom

0 %0 %2 % 2% 2 % 2 %

3 7%

1 3%5%

16 %

2 1%

Fa c t o r s & V a r ia b le s :

D isastersC om pe t itio n

Infrastructure

Taxes

Account ing

M anagem ent

M arket ing

E c o n o m i c

Planning

F inance

Nig er ia

0 % 5 % 4 %

2 3 %

5 %5 %5 %6 %

3 5%

4 % 8 %

Fa cto rs & V aria b les :

D is a ste rs

C om p etit io n

Infra struc ture

Ta xes

A cco unting

M a na ge m e nt

M a rke tin g

E co no m ic

P lann ing

F i n a n c e

Fig. 2. Key Factors influencing SMES failure in Nigeria

The secondary hypothesis (H2) of this

research was conducted by the use of the Chi-Square test. This is a technique used in carryingout non-parametric analysis on comparative data.It makes use of an expected set of data (FE) andan actual set of data (FA).

This research compares between the SMEssector in the UK and their counterparts in Nigeria.As such, the set of data from the respondents inthe UK was considered the expected data, whilethe set of data from Nigeria was considered theactual data. The data summarised the overallcolumn on the spread sheet and was derived fromresponses to questions 1 10 in the questionnairewhich were meant to test the variablesinvestigated in the study. Table 2 shows that thecritical Chi-Square value is 48.602 for 34 degreesof freedom (35 cells minus 1) at the 0.95 confidenceinterval.

From Table 2, the calculated 2 = 58.2156. Todetermine the critical value, the degree of freedom(DF) is calculated as follows:

DF = n - 1

= 35 1= 34

Where the degrees of freedom is 34 and at a 5percent (0.05) level of significance i.e. 0.95confidence interval, the critical value is 48.602.The computed Chi-Square (58.2156) is not withinthe interval i.e. it is more than the critical value(48.602); therefore, the hypothesis cannot beaccepted. Hence, the secondary hypothesiswhich suggested that There is a significantdifference in the Impact of Key Factors InfluencingSMEs Failure between the United Kingdom andNigeria. is also rejected. This evidence clearlysuggests that there is no significant difference inthe impact of the key factors influencing SMEsfailure in the UK as opposed to those influencingSMEs failure in Nigeria.

CONCLUSIONS AND IMPLICATIONS

This paper sought to comparatively examinethe individual impact of ten key factors influencing


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SMEs failure in both the United Kingdom andNigeria. Furthermore, this study attempted toidentify the most crucial factor influencing SMEsfailure in each of the countries. The key findingof this study rejected both the primary andsecondary hypotheses; and it was found thatwhile the internal factor i.e. management problemswas considered the most crucial factorinfluencing SMEs failure in the UK (as suggestedDay, 2000; Dewhurst and Burns, 1993); the externalfactors such as poor economic conditions andinadequate infrastructure were the most crucialfactors identified in Nigeria (as suggested inAdenikinju 2005; Oboh 2002; Okpara 2000).

This does not mean that the other factorsinfluencing SMEs failure such as financialproblems, poor and improper planning, poor

marketing and sales, and disaster amongst otherare not crucial, because they also are; all the same,

the implication of this study exposes the areasthat require priority attention in the SMEs sectorof both countries. Although this study is notexpected to be generalised, nonetheless, the studyreveals the need for more leadership andmanagement skills development efforts in the UK.It also beams the searchlight to the severeproblems of poor economic conditions andinfrastructural inadequacy which hinder thegrowth and development of the SMEs sector inNigeria.

This also implies that while the internal factorsare most crucial to SMEs failure in the UK, the

external factors are considered most crucial inNigeria. The Nigerian government needs to focusurgent attention to addressing economicproblems and infrastructural inadequaciesimpeding the growth of the SMEs sector such asreducing interest rates, stabilising foreignexchange rates, resolving multiple tax issues,tackling the issues of dilapidated roads, andrevamping the energy sector amongst others.

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Table 2: Key factors influencing SMES failure inthe between the United Kingdom and Nigeria

Chi-square test for goodness of fitNigeria United NGR Kingdom (FA FE) 2

(FA) UK (FE) FA FE (FA FE)2 FE

40 37 3 9 0.243233 38 -5 25 0.657941 32 9 81 2.531342 35 7 49 1.438 32 6 36 1.12534 35 -1 1 0.028638 37 1 1 0.02738 37 1 1 0.02726 38 -12 144 3.789527 38 -11 121 3.184239 41 -2 2 0.048846 32 14 196 6.12541 36 5 25 0.6944

38 29 9 81 2.793136 29 7 49 1.6946 33 13 169 5.121227 35 -8 64 1.828644 39 5 25 0.64143 38 5 25 0.657937 38 -1 1 0.026341 36 5 25 0.694443 36 7 49 1.361142 36 6 36 142 32 10 100 3.12543 31 12 144 4.645244 34 10 100 2.941242 33 9 81 2.454643 35 8 64 1.828644 34 10 100 2.941235 36 -1 1 0.027839 34 5 25 0.7353

39 33 6 36 1.090939 37 2 4 0.108139 32 7 49 1.531339 33 6 36 1.0909

58.2156


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