THE IMPACT OF BUSINESS ENVIRONMENT ON ENTREPRENEURSHIP PERFORMANCE

Introduction

1.1 Background of the study

The present day business environment is marked by different dynamic features such as global competition, information technology, quality service revolution and corporate social responsibility which are compelling managers to rethink and reshape their approach to their various operation responsibilities. Due to this paradigm shift, new firms are emerging that are more responsive to both their internal and external environments (Luthans, 1995). The internal factors exist within the operational base of an organization and directly affect the different aspect of business. These internal factors include firms Mission, resistance to change, poor quality staff, lapses in internal control, bad resource/financial management, operational weaknesses, high staff turnover and over-leveraging while the external factors include government regulation, economic recession, political turmoil, low cost competitors, changes in customer behavior, environmental/ health issues, technological changes, natural disasters, change in input supply, changes in macro economic variables and terrorist attacks. Hence, it is important for a business to keep a pace with the various changes in the environment in order to survive in the long run. Similarly, every business settings often bring in new way of thinking about the business environment and new ways of acting. (Belohlav,1996). Hence, coping with these multitude of challenges require a firm that can easily adapt to change. This makes the small and medium scale enterprises (SMEs) the driving force in economic growth and job creation in both developed and developing countries due to their ability to experiment new approach at minimum cost and create a standardized product/ services that can meet the needs of a large target market (Sunter, 2000). However, more than half of newly established businesses survive beyond five years. Hence, the identification of those factors which empirically lead to entrepreneurial success/failure would assist in equipping small business owners with the necessary managerial skills to survive in today’s competitive environment as well as exploit several strategies that will improve their operational efficiencies. Overall improvement of the business environment is considered a very important element of market transformation success and economic reform in transition countries. It is also considered one of the most crucial factors in attracting foreign investments and is a key catalyst for economic growth acceleration (Alexandrova, 2004).

The business environment, in general terms, consists of the myriad forces that are beyond the control of firm-level management in the near term; thus, it can create both opportunities and threats for firms (Bourgeois, 1980). The role of the business environment in firms’ operations is supported by most previous studies, although their findings are mixed. Previous studies have provided empirical evidence that the specific local business environment in which a firm is embedded can make a significant contribution to its performance (e.g., Neneh & Vanzyl, 2012; 2014; Ng & Kee, 2012; Tu, 2012; Chittithaworn, Islam, Keawchana, & Yusuf, 2011; Kennerley & Neely, 2003; Tan, 1996; Tan & Litschert, 1994; Okoroafo, 1993). Other studies have found that these factors have an inverse relationship (e.g., De Jong, Phan, & van Ees, 2012; Chittithaworn et al., 2011; Luo, 1999; Ward, Duray, Keong Leong, & Chee-Chuong, 1995). These mixed results may implicitly suggest that the effect of the business environment on firms may vary by national or regional economic context (Ng & Kee, 2012; Alexandrova, 2004). In particular, firms in developed countries are clearly better off when their business environment is certain. However, the effect of their business environment on firms in transition economies, such as China, Thailand, or Vietnam, may be different (Chittithaworn et al., 2011). The effect may not even be the same in different transition economies. Therefore, we argue that the findings of previous studies addressing the effects of business environment on firms in others countries continue as an ongoing debate and may not be applicable to Vietnam in general or the Mekong Delta (MD) in particular. Such topics in this region are under-explored. Therefore, the objective of this study is to fill this gap by investigating how the local business environment affects SMEs’ performance in the MD. The findings of this study provide useful guidance on how local government should improve the business environment by contributing to the competitive advantage of SMEs and enhancing their performance.

The contributions of the paper are twofold. First, we develop a model capturing the relationship between the local business environment and SMEs’ performance by extending theoretical arguments on the role of local government policy, “speed money”, and the local labour force in SMEs’ performance. Second, the study empirically confirms the effects of these factors on SMEs’ performance by testing 63 manufacturing and service SMEs located in Can Tho, An Giang and Hau Giang. The study of these SMEs provides new insights into the importance of the local business environment for SME operations and for the SME literature.

1.2 Statement Of The Problem

Entrepreneurial development has continued to be a popular concept in the world due to its leading role as catalyst for nation’s growth and economic development. Entrepreneurship globally, can boast of being a major employer of labour if compared to major industries and multinationals (Kadiri, 2011).

The Nigerian government has initiated several programmes that are geared towards the mobilization, training and supporting initiatives that will development. despite all these, the efforts seems abortive, this can be linked to the problems embedded in the Nigerian business environment, some of which are corruption, unavailability of good, roads, erratic power supply, political instability, presence of inflation.

1.3 Objective Of The Study

The main objectives of this research are to investigate the impact of business environment on entrepreneurship performance in Akwa Ibom State. In achieving the main objective there are specific objectives and they are to:

1. To unveil the environment challenges confronting business in Nigeria.
2. Identify the impact of business environment on entrepreneurships productivity.
3. To assess governments monitoring and control activities to ensure entrepreneurship performance in sustaining economic development in Akwa Ibom State.

1.4 Research Questions

In carrying out this research, some questions become imperative:

1. What are the environmental challenges confronting entrepreneurship in Akwa Ibom State?
2. How does the business environment affect entrepreneurship performance in Akwa Ibom State?
3. What are the government monitoring and control activities to ensure entrepreneurship performance in sustaining economic development in Akwa Ibom State?

1.5 Research Hypotheses

H0: there is no environmental challenge confronting entrepreneurship performance

H1: there is an environmental challenge confronting entrepreneurship performance

H02: business environment does not affect entrepreneurship performance in Akwa Ibom state

H2: business environment does affect entrepreneurship performance in Akwa Ibom state

1.5 Significance Of The Study

The study will be significant in the following ways:

The study will be beneficial to entrepreneurs in Akwa Ibom as the findings of the research will help them to pay special attention to those factors which are capable of affecting their enterprise negatively. They study will also contribute to the existing knowledge on entrepreneurship development.

The study will also serve as a good reference material to students undertaking similar research.

1.6 Scope And Limitation Of The Study

This research work focused on the impact of business environment on entrepreneurship in Akwa Ibom State, using selected enterprise in the state as a case study.

Limitations of the Study

The study was limited by some factors which include:

The Factor:

The factor led to the reduction in the size of the sample used for the study, due to the fact that the researcher had less than three months to complete the research.

Financial Factor:

The study was also limited by financial factor. The inadequate funds at the disposal of the researcher affected the way data was collected since the researcher has to travel for the distribution of questionnaire.

Material Factor:

Material factors also limited the study. The researcher had no written down material to use for the study, but had to browse the internet, ask friends some questions, brain storm many idea as possible and also visited the library to gain more knowledge for the completion of the research.

1.7 Definition Of Terms

Environment:

Environment is everything that is around us. It can be living or nonliving things. It includes physical, chemical and other natural forces.

Business:

Business is the activity of making one’s living or making money by producing or buying and selling goods or services. Simply put, it is any activity or enterprise entered into for profit.

Entrepreneur:

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business.

Entrepreneurship:

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. The people who create these businesses are called entrepreneurs.

1.8 Organization Of The Study

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.

Chapter two highlight theoretical framework on which the study is based, thus the review of related literature.

Chapter three deals on the research design and methodology adopted in the study.

Chapter four concentrate on the data collection and analysis and presentation of finding.

Chapter five gives summary, conclusion, and recommendations made of the study