DETERMINANTS OF SMALL AND MEDIUM SCALE ENTERPRISES’ (SMES) SUCCESS IN NIGERIA
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DETERMINANTS OF SMALL AND MEDIUM SCALE ENTERPRISES’ (SMES) SUCCESS IN NIGERIA
The definition of small and medium-sized enterprises (SMEs) varies globally. An SME’s designated size is determined by the country in which it operates. Depending on the country, a company’s size or classification as a SME might be dependent on a variety of factors (O’Regan et al., 2004).
The characteristics include annual revenue, the number of employees, the quantity of assets owned by the company, or any combination of these elements. The United States defines SMEs differently depending on the industry.
Definition of small and medium-sized enterprises in the United States
As previously stated, the United States uses different definitions and rules for SMEs that vary by industry. The United States likewise defines SMEs according to the industry in which they operate.
For example, a manufacturing business can be categorised as a SME if it employs up to 500 employees, whereas a wholesale company can only have 100.
There are also differences amongst industry sectors. For example, in the mining business, companies that dig for nickel or copper ore can have up to 1,500 people, whereas a silver mining company can only have up to 250 employees to be deemed a SME (O’ Regan et al., 2004).
Canadian SMEs
In Canada, SMEs are companies with fewer than 500 employees. Businesses with 500 or more employees are strictly classified as large. To elaborate, Industry Canada, an organisation dedicated to promoting economic and industrial growth in Canada, defines small firms as those with less than 100 employees, as long as they create commodities.
The cut-off for small firms that provide services is 49 employees or less. Günterberg et al. (2004). Companies that fall somewhere between these employee-count thresholds are termed SME.
Another organisation, Statistics Canada, which does research and gathers data on enterprises and commerce in the country, meets the criterion that SMEs have no more than 499 employees. However, it also states, based on research and data, that SMEs have a gross sales of less than $50 million.
Small to medium-sized organisations account for a sizable proportion of worldwide business activity. It is crucial to realise that while there are commonalities, each country, as well as the industries and sectors within them, may have distinct definitions of a SME. Günterberg et al. (2004).
II The Importance of SME’s to National Economy
There is rising evidence around the world that SMEs play a significant part in any country’s economic development. SMEs are becoming increasingly a subject of significant interest in emerging countries, countries in transition, as well as countries with industrialised economies. Günterberg et al. (2004).
In market economies, SMEs drive economic progress. SMEs provide a substantial contribution to long-term growth and job creation due to their private ownership, entrepreneurial spirit, flexibility and adaptability, and ability to respond to difficulties and changing circumstances.
Until recently, the private sectors of many emerging nations lacked the medium level of development. Investors, legislators, and professionals focused their efforts mostly on major organisations with more than 500 people, larger enterprises, or multinational corporations.
TAX incentives and subsidies were targeted at large firms and MNCs, whereas organisations such as the World Bank and UNDP focused on aiding micro-enterprises, which typically have fewer than 5 employees.
Small and medium-sized businesses (SMEs) fall somewhere between these two extremes. Günterberg et al. (2004). In the past, SMEs were regarded as not being the major driver of the economy, therefore it was deemed unnecessary for the government to focus its policies on them.
However, there have recently been several encouraging attempts to promote SMEs operating in critical parts of emerging nations, not just via investments but also through corporate leaders who recognise the role of SMEs in fostering long-term economic development.
SMEs are becoming increasingly important in national economies.
The percentage of that presence is displayed below:
Number of companies: more than 99% (Japan, US, Germany, China)
Number of employees: 66% in Japan, 53% in the US, and 68% in Germany.
Value added: 55% in Japan, 51% in the USA, and 455 in Germany.
They contribute significantly to the national economy by supplying a variety of goods and services, creating job opportunities, building regional economies and communities, facilitating market competition, and offering innovation.
Their main areas of presence include the manufacturing, distribution, and service industries.
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