IMPHERICAL REVIEW

According to Obamuyi (2007), SMEs performances are constrained by what he called the internal and
external factors; the internal factors being the entrepreneur competencies, commitment, resources,
strategic choice while the external factors include competitors, culture, technology, infrastructure and
government policy. Similar factors have also been identified by the Nigerian National Bureau of Statistics
and SMEDAN (cited in Terungwa, 2011) as militating against SMEs performance in Nigeria. These are
lack of access to finance, lack of work space, weak infrastructure, lack of entrepreneurship/vocational
training, obsolete equipment, lack of access to research and development, inconsistent policies, lack of
Government support, excess and multiple tax and high interest rates (Terungwa, 2011). Similar factors
have also been identified by the Nigerian National Bureau of Statistics and SMEDAN (cited in Terungwa,
2011) as militating against SMEs performance in Nigeria. These are lack of access to finance, lack of work
space, weak infrastructure, lack of entrepreneurship/vocational training, obsolete equipment, lack of
access to research and development, inconsistent policies, lack of Government support, excess and
multiple tax and high interest rates (Terungwa, 2011). In the same vein, Olugbenga (2012) identified
challenges and problems that frustrated SMEs in Nigeria and made some of them die within their initial
stage or perform below expectation even after surviving as inadequate security of lives and properties;
inconsistent monetary, fiscal and industrial policies; limited access to markets; multiple taxation and
levies; lack of modern technology for processing and preserving products; policy reversals; capacity
limitations; data inadequacies; harsh operating environment; fragile ownership base; and fragile capital
base. In Nigeria, small scale industries represent about 90% of the industrial sector in terms of
enterprise. SMEs contribute significantly to economic development through employment, job creation
and sustainable livelihood (Mawoli, Sarkin-Daji, &Wushishi, 2013 andTerungwa, 2011) Despite the
significant contribution of small and medium-sized enterprises to the Nigerian economy, Coronavirus
has significantly impeded the growth and development of the sector. The coronavirus disease 2019
developed in a densely populated manufacturing and transport hub in Wuhan central China (Zhu, Wei, &
Niu, 2020). In another development, the work of Stern (2002) suggest that small or more decentralised
banks (where branch managers are able to exercise certain level of authority in adjudicating decisions)
are more likely to lend to start-ups and small businesses than those in large, hierarchical banks where
adjudication decisions are centralised. Terungwa (2011) attributed the reluctance of banks to extend
credits to SMEs to the following reasons amongst others: inadequate collateral by SMEs operators, weak
demand for the products of SMEs due to the dwindling purchasing power of Nigerians, lack of patronage
of locally produced goods, poor management practices by SMEs operators and undercapitalization.

Oghunbiyi(1999:10), also saw key problem facing most small-business in

security demanded by banks often means thatsmall-scale industrialists are unable

establishment of new industries or to carry out expansion plans. The inability to

attract financial credit hasstifled the growth of this sub-sector. In his view,

of small-scale industries through the provision of loans them. Stiff collateral

Nigeria as that of lack of finance according to him, this lack is whether for the

commercial banks which were expected to be the launch pad for the development

to meet these provisions, consequently losing the chance to obtain loans. In addition, high interest rates
changed on loans scared off potential small-scale

entrepreneurs.

Banks on their own part, have argued that they are discouraged to lend to

adequate finance or accounting records about their business. High percentage of

default on repayment of loans is among the reasons that led to this sub-sector to

up feasibility reports that are not viable, lack managerial skill and do not maintain

this sub-sector since many potential and existing small-scale entrepreneurs draw

be regarded as high risk for lending purposes.

Klade (2001:15) added that commercial banks sometimes shun the small

business owners who on getting loan soon divert the finds into other used while

they avoid the banks and resist any investigation into their activities.

The problem related to management arises from the entrepreneur’s limited

to understand phenomena and to solve problem. A small-scale business owner

how in project planning and appraisal and little or no exposure to modern

who has not acquired enough knowledge about business is likely to fail. Another

the large scale enterprises while the technical ones are due to his limited know

education and training knowledge consists of facts and theories that enable people

self rather than business and the import dependents nature of the business just as

management problem is the refusal of these small-scale industrialists to team up

and pool together available resources, the lack of honesty and desire to develop

technology.

(Vesper, 1999) says that incompetence of management is another problem

facing management a small business owner may know all the management principles and theories; his
management particle may jeopardize his business. He

management. Such a business operated by small-scale owners may likely to fail.

appropriate human relation ability and may not possess the appropriate skills of

Good management ability is pre-requisite for success in both large and small

may not posses his leadership qualities, be willing to delegate responsibilities, lack

business firms alike.

Concretely, this means skill in handling men, money and inventory along

aggressively and created good relationship with employees, customers and the

with the ability to formulate wise policies, select proper method, merchandize

general public.

The commercial problems consist of his ability to organize market surveys

performing this function effectively on why such a failure was that the

managerial capacity and capability as well as technology.Another contribution,

problems of small-scale business in Nigeria as finance and financial control,

developed countries to assist in the development process. Specifically, they are set

to provide financial assistance to indigenous companies likely to face problems

neglecting the most important industrial sector of the economy that is small-scale

Osayi was of the view that “development institutions are often established in less

development institutions have contributed to the existing structural imbalance by

seeking capital. However, it could be seen that the institutions have failed in

and product distribution channels. However, Osayi enumerated three major

industries.

Many of the small-scale units are undercapitalized. They are unable to raise

fund in this, they suffer from inadequate working capital resource. They are unable to arise fund in the
capital market because they cannot fulfilthe conditions which
to them are rather costly, nevertheless, a case can made for shortage of finance as

constituting a major obstacle to the growth of a viable small-scale enterprises in

Nigeria.

Owuola wrote that “undoubtedly, shortage of finance is not the only

problem of small-scale enterprises in Nigeria, others including unfavourable

government regulation and policies (such as biased and lack of necessary fiscal

incentive) and relatively unsophisticated management.

One of the most serious problems of inhibiting the location of small-scale

market lack of access to institutional credit. The main reason for this is that only of

lenders sucha commercial bank in view of this, the already set up industries find it

industry isthe shortage of finance capital. The small-scale industry suffers from a

them have enough assets to satisfy the collateral requirements of institutional

difficult to expand, let alone setting up new ones.

Another problem which prevents accurate assessment of the role played by

employment but difference in factor proportion among establishment, the

complexity of capital and the type of organization are some of the considerations

small-scale enterprises in the definition for instance, as the term of size of

which reduce the operational meaning fullness of the meaning.

Teriba and kayoed wrote that “small-scale enterprises are not properly

of competing needs for government resources; sufficient funds are not always

assessed because of their definition.Government funds are not limitless, in the face

available to promote the needs of small-scale business. Credit facilities allowed by the bank and
government are often highly united and as such it is not enough for

their business with little resources. For example,in 1996 credit guideline by the

them to finance the business and thus will not encourage them to carry on with

CBN, the percentage of their credit outstanding to small-scale enterprises is 30%.

1 Institutional theory

An institutional theory is a capable path for exploring the borders between businesses or society that
have been shaped SMEs in various ways to sustainable growth (Fauzi & Sheng, 2020). Explaining that
sustainable pursuits is not primarily a voluntary act, as the performance of firms are featured with
several challenges, including government rules and marketplace pressures. Therefore, institutional
theory focuses on factors that are externally or internally central within the firm and sustainable
innovation. From the institutional theory of sustainable growth for small and medium-sized enterprises,
opportunities with normative, coerciveness and mimetic drivers to influence small and medium-sized
enterprises to shape environmental, social or economic decision-making and to legitimise the vision of
sustainable business practise (Shibin et al., 2020; Caldera, Desha & Dawes, 2019). Sustainable business
practise 'is an aspiration for an increasing proportion of small and medium-sized enterprises around
the world, promising profitability, resilience and positive social and environmental impacts' (Caldera et
al., 2019).

In many creative ways, business owners are responding to institutional constraints, such as
implementing innovative business strategies, developing strength and courage, partaking in
associations, trying to give back to the community and collaborating with the authorities
(Eijdenberg, Thompson, Verduijn & Essers, 2019). Institutional theory has been widely used in addition
to establishing sustainable growth policies and procedures (Roxas, Lindsay, Ashill & Victorio, 2007;
Heiskanen, 2002) and in recognition of quality plans or technology orientation (Hatch, 2006; Barratt &
Choi, 2007; Nair & Prajogo, 2009; Liu, Ke, Wei, Gu & Chen, 2010). Institutional theory provides enhanced
enlightenment once the driving force behind the practise of technology orientation has been
acceptability (DiMaggio and Powell 1983). There are three kinds of competitive pressures that
encompass the strength of the institutional structure; forceful pressures, imitation pressures and
normative pressures (DiMaggio & Powell 1983). All three factors act as the driving force behind the
actions of organisations to enhance their initiatives for sustainable, social and environmental growth
through which enterprises achieve appropriateness and perceived value. Institutional theory identifies
broader and more resilient approaches to social structures; consideration of structural-building
processes as rules for the social behaviour of the authorities through rules and standards (Scott, 2004;
DiMaggio & Powell, 1983). In other words, Caldera, Desha and Dawes (2017) tend to focus on a process
in which practices can be incorporated into an institution as recognised economic, social and
environmental standards. Institutional theory refers to innovative elements or capabilities with
sustainable growth of small and medium-sized enterprises as a stimulus lens that encourages
management practises to pursue sustainable business growth (Srisathan, Ketkaew & Naruetharadhol,
2020) in the form of factors such as culture, the legal and social environment, traditional or
cultural values, economic incentive schemes and market value. The general concept focused on the
rules laid down by the institutions, while the new perspective focused on institutional
entrepreneurship, such as the implementation of sustainable business models (Hadjimanolis, 2019) and
focus on opportunities (Laukkanan et al., 2013). Moral legitimacy and Isomorphism are two main
reasons behind the behavioural patterns of enterprises related to institutional theory. In order to meet
the needs of stakeholders and society, the company seeks legitimacy (Ratten & Usmanij, 2020). The
pressure of institutional factors has led to huge or isomorphic decisions on sustainability by firms
(Glover, Champion, Daniels & Dainty, 2014; Ahmad et al., 2020). Enterprises facilitate innovation
within the framework of the institutional structure through collaboration with various stakeholders to
encourage sustainable growth of SMEs.

2 Resources based theory

The starting point of resource based vies theory was date back to the era of (Penrose, 1959) who
suggested that resource possessed, deployed and used effectively would give more results than other
industrial structure employed. Wernerfelt (1984) viewed firm from the viewpoint of critical
resource, coined “resource base view”. Prahalad and Hamel (1990) highlighted the term “core
competency” and the focus attention was on a range of critical resource, calling it the firm
capability and it was referred to as competitive advantage (Barney 1991). Other scholar described it
as distinctive competency, while the strategic aspect in resources and competency usage (Papp &
Luftman, 1995). The resource based view theory an extension of the theory of the growth of the firm
(Barney, 1991; Grant, 1991). This theory described the sustainable competitive advantage of the
firm resource performance of the firm (Wernerfelt, 1984). The resource based view theory had
identified opportunities based on uniqueness of resource that would lead to competitive advantages
(Grewal, Iyer, Javalgi & Radulovich, 2011). Considering the management viewpoint, the research
improved comprehension of context of the study and approaches that focus on sustainable franchising
development (Samsudin et al., 2018). Besides business owners on their growth path, a resource-
based view is indeed important to consider. The assessment of all resources allows the
enterprises to achieve their business objectives efficiently. Selecting an appropriate growth
strategy enables managers to achieve growth adversity or minimise changes in direction and growth
difficulties. Resource based view theory, maintaining that the dynamic capabilities theory has
asserted that managerial writers required a framework necessary to explain the ways enterprise‟s
culture of openness and innovation develops into timely, rapidly or attributes flexibility in dynamic
marketplaces (Kiiru, 2015; Teece, Pisano & Shuen 1997). Resource based view theory of the firm
drawbacks are mostly centred on an organisation-specific basis, hence it is not generally applicable
(Davis & Bendickson, 2020; Rezaee, Tsui, Cheng & Zhou, 2019). The resource based view theory
focused was on central issues involving capabilities or firms‟ performance which has a long stand
relevance within the sphere of strategic management (Darcy, Hill, McCabe & McGovern, 2014; Colette et
al., 2013; Easterby-Smith et al., 2009). The resource-based perspective of the firm and the concept of
sustained competitive advantage are often not the culture of small and medium-sized enterprises that
are spotted in a desperate attempt at sustainability and growth (Darcy et al., 2014; Carson, 1990).
Resource based view theory (RBVT) like Porter‟s model of competitive forces cannot contribute for
the enterprises competitive advantage effectively in rapidly dynamic marketplaces. In similar vein, the
theory did not fully addressed when to encourage extra valuable resource or how to renew the existing
stocks of valuable, rare, imperfectly imitable and inadequately sustainable resources that would be
revitalized in untenable environmental circumstance. According to Priem and Butler (2001) the theory
has been criticized widely for being vague and has deficiencies regarding operational validity.

3 Diffusion of innavation (DOI) theory

From the perspective of innovation and technology orientation, Rogers (1995) proposed the Diffusion of
Innovations (DOI) theory in order to explain the concept by which innovation could be transferred
between different people over certain periods of time by different means. The process of introducing
a new innovation has been investigated for more than 30 years (Rogers, 2003; Rogers, 1983).
Rogers' theory as noted by (Al Mamun, 2018) describes, among the most popular models of adoption in
his book "Diffusion of Innovations" and has used the model as a framework for many studies from
a wide range of subjects. The diffusion of innovation theory has been used in several fields, such
as strategic management, political science, management, public health, communications,
accounting, history, economics, technology, innovation and entrepreneurship, etc. (Johnson, 2015;
Stuart, 2000). In addition, Rogers' theory has been widely used in the theoretical framework in the
field of technology adoption and innovation diffusion. Rogers' growth in innovation theory is perhaps
best suited to exploring the technology orientation in small and medium enterprises and insightful
ecosystems (Li & Asim, 2019; Parisot, 1995; Medlin, 2001). Diffusion of innovation, research usually
involves technological innovation and Rogers (2003) typically used the word "technology" or
"innovation" as synonyms. Rogers refers to the diffusion as "a process in which innovation is thoroughly
communicated between members of the social system through certain channels over time". Innovation,
communication channels, time and social structure are the four basic elements of diffusion of
innovation (Chege & Wang, 2020). Previous research has revealed that organisational culture
encourages innovation (Do, Mazzarol, Soutar, Volery & Reboud, 2018, Petdersen, Gwozdz & Hvass
2018). Indeed, a culture that promotes and embraces innovation can be linked and defined by conduct
that demonstrates an affection and incentive for advancement, risk-taking, free expression, focus on
teamwork, communication, respect and trust, together with the promotion of group meetings and
staff relations, empowering staff to improve their effectiveness, and working regularly on current
model (Lijauco et al., 2020; Tang, Park, Agarwal & Liu, 2020; Rogers, 2003, 1995). The primary drivers of
sustainability, competitive advantage and efficiency for small and medium-sized enterprises are the
introduction of new technology and non-technology innovation (Price, Stoica & Boncella, 2013).
According to Fagerberg, Mowery and Nelson (2004) SMEs with higher innovations have significantly
better ratios of income and employment than SMEs that are less innovative and creative. As a result,
innovation research, particularly in the field of small and medium-sized enterprises, is vital due to the
newness array of processes and activities undertaken by enterprises and their innovation
responsibilities, which lead to sustainability, success in the enterprise and inclusive growth
(International Labour Office, 2015; Anderson & Eshima, 2011; Jia, Tang & Kan, 2020). Rogers (2003)
defined innovation as an idea, practise or project considered to be specific to an entity or to a number of
other adoption components. Innovation could have been invented a long time ago, but if people see it
as new, it could be an innovation for them as well. In this study, based on Rogers' view of innovation
as an idea or practice, the conceptualising of innovation elements or capabilities such as
organisational culture, strategic orientation, technology orientation and strategic business model
promote sustainable growth for small and medium-sized enterprises directly or indirectly related to
stakeholders, customers, suppliers, investors, government and co-operators were necessary. Assist in
addressing the economic needs that are consistent with the United Nations Sustainable Development
Goals Agenda 2030 (SDG, 2020; Francke & Alexander, 2019). The diffusion of innovation involves
establishing the capabilities of innovation cultures that promote the effectiveness of innovation
competitive advantages that support sustainable growth of small and medium enterprises in a new
market dynamic.