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Full Project – IMPACT OF DIGITAL TECHNOLOGY ON THE DEVELOPMENT OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

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CHAPTER ONE

INTRODUCTION

Background of the Study

Small and Medium Scale Enterprises stirs up ideas that could enhance enterprises. This perhaps informed why Small and Medium Scale Enterprises is fundamental to generating new ideas and developing new business opportunities (Shanghai, 2001). Ayeduso in Osuala (2004) stated that while the word entrepreneur describes the person or the actor, Small and Medium Scale Enterprises talks about the actions, efforts, abilities, skills, processes or sometimes the business unit itself. Following the same opinion, Inegbenebor (2006) said that Small and Medium Scale Enterprises is about learning the skills needed to assume the risk of establishing a business. It is about developing strategies and executing them with all the vigour, persistence and passion needed. According to him, preparing for Small and Medium Scale Enterprises focuses on attitude and skill formation for the identification of economic opportunities, feasibility analysis, business planning and making arrangements for the sustenance and growth of the enterprise. Similarly, the Small and Medium Enterprise Development Agency (SMEDA, 2004) stated that Small and Medium Scale Enterprises develops when a person organizes and manages a commercial undertaking. SMEDA also noted that Small and Medium Scale Enterprises combines strong character of diligence, innovativeness, readiness to take risk, ability to sense opportunity, ability to mobilize human and material resources, being goal-oriented and focused, preserving and dogged for growth and excellence. Small and Medium Scale Enterprises is certainly critical in economic transformation. Small and Medium Scale Enterprises, according to Ray, Adams and McMilliam (1990) is being able to discover innovations that can enhance marketing of goods and services, create enabling business environment, staff training and deal with barriers to growth.

To define enterprise, Hyper Dictionary (2009) stated that enterprise is a purposeful or industrious undertaking, readiness to embark on bold new ventures and an organization created for business ventures. In Nigeria, as in other countries, many variables have been applied by agencies in the classification of enterprises. Eneh (2005) recognizes micro, small, medium and large scale enterprises. His classifications includes the size of employees, the amount of capital investment, annual sales turnover, total assets or a combination of these to classify enterprises.

Medium scale enterprises are those with over 50 million Naira but not more than 200 million Naira or 101 to 300 workers. Obitayo in Eziama (2003) asserted that small-scale enterprises possess a total investment of between one hundred thousand and two million naira.

Similarly, Osuala (1993) viewed a small-scale enterprise as any manufacturing or serving industry with a capital investment not exceeding N150,000 in machinery and equipments and employing not more than fifty workers. Again Inegbenebor (2006) stated that micro or cottage industries are those with one and ten workers, small scale industries with eleven and hundred workers, medium scale enterprises with one hundred and one and three hundred workers while large scale enterprises are with three hundred and one workers and above. Eneh (2005) said that most enterprise jobs are in the service and manufacturing sectors. They include soap makers, bakers, furniture makers, leather makers, printers, welders, vehicle repair and maintenance, electrical services, fashion designers, hotels, banks, textiles, plastic and pharmaceutical enterprises.

Emphasizing on the importance of enterprises, Eneh (2005) stated that it is indisputable that enterprises hold the key to national economic development because they create jobs, wealth, alleviate poverty, promote equity, social security, encourage the culture of self–help and self– reliance. He added that they promote enterprises, productivity, provide opportunities for careers and skills development as well as rural and community development. Similarly, World Bank International Finance Corporation Report in United Nations Development Programme (UNDP, 2007) maintained that enterprises are important because on the average, enterprises comprise over 95 percent of the economy, the contributions of the enterprise to employment and the countries’ gross domestic product (GDP) are by no means trivial. UNDP still reported that close to 140 million enterprises in 130 countries employed 65 percent of the total labour force. Enterprises are the frame work for economic growth and innovation. Moreover, Ike (2004) noted that enterprises respond positively to social and free markets, creativity, innovation, promotion of individual and group initiative, self-reliance and above all self fulfillment.

As affirmed by Ecorys (2007) whether enterprises be multinational, large or not, the nature and the growing importance of the competitive advantage afforded by new technology, together with trade, capital liberalization and growing pressures of competition are forcing enterprises to exploit both technological knowledge and markets on an international scale. Small and Medium Scale Enterprises gives rise to innovations. Nagy (2003) pointed out that investment in Information and Communication Technologies (DT) and use, can affect innovation. DT according to UNDP (2001), refers to the full rang of electronic technologies and techniques used to manage information and knowledge. In this study the term DT is not referring to all the media currently available but more restrDTedly to the recent computer technologies, internet, computer and cell phones.

Love and Irani (2001) said that enterprises could often experience barriers through lack of human technological resources needed for DT and e-commerce. Especially when enterprises have to focus on day-to-day operations and lack the time and extra resources necessary to understand the benefits of new technologies. Even if they are aware of the potential benefits of adopting DT, they would still require know-how or qualified personnel to enhance entrepreneurial operations. They claimed that enterprises may also lack managerial understanding and skills for e-business. Successful integration of e-business requires many enterprises to restructure their business processes, to change organizational structures and to

redefine their core competence and positions in value chain. The professional advice of Information Technology (IT) and e-business consultants could help them but enterprises may not easily have ready access to them because of their relatively high costs.

As pointed out by Agbonifoh (2006) e-commerce is an on-line buying and selling of goods and services via the computer without leaving the comfort of their homes or offices. E-business is used to describe businesses run on the internet or utilizing internet technologies to improve the productivity or profitability of a business. This function of e-business is referred to as e-commerce and the terms are used interchangeably. Also, the Information Technology Association of America (ITAA 2005) said that IT is the study, design, development, implementation, support or management of computer-based information systems, particularly software application and computer hardware. It deals with the use of electronic computers and computer software to convert, store, protect, process, transmit and securely retrieve information. When computer and communication technologies are combined, the result is information technology.

As aptly pointed by UNDP (2007) DT enhance enterprises efficiency, reduce costs and broadens market reach both locally and globally. The uses of DT are increasingly transforming modern business by enabling the rapid, reliable and efficient change of large amounts of information. Access to and the use of DT by enterprises will lead to greater job creation, increase public revenue and a general rise in the standard of living. Furthermore, DT offers enormous opportunities to reduce social and economic inequalities, particularly those related to income generation, poverty reduction, education, health, environment and gender equality and thus helps to achieve broader development goals.

Panos (2010) stated that DT – based knowledge and products contribute directly to wealth creation. Through this knowledge entrepreneurs use DTs in a number of ways by substituting phone calls for travel, which saves time and money and using DTs to obtain information on prices for their own produce and purchases. Duncombe and Heeks (1999) opined that DTs have done the most to reduce costs, increase income and reduce uncertainty and risk. Phones support the current reality of informal information systems, they can help extend social and business networks. They clearly substitute for journeys and in some cases for brokers, traders and other business intermediaries.

For Nigerians to be employable and entrepreneurial the demand is not degree or qualification but innovative people who can contribute meaningfully to the economy and society. It is against this background that this study seeks to find out how Digital Technology will aid the Development of Small and Medium Scale Enterprises in Nigeria.

Statement of the Problem

In the past entrepreneurs use obsolete but cheaper technologies such as typewriter and cyclostyling machines which are now filled with disadvantages in the present day of Digital Technology. These has negative implications for boosting of entrepreneurial skills. For example, with the use to this technologies error correction, communication, document scanning and formatting are not possible.

However with the advent of DT it has been found that entrepreneurial skills are facilitated. DT has great potentials in enhancing skills of entrepreneurs. It has facilitated training through on-line learning and helped in the area of enhanced business environment. To scan, organize and store documents are possible with computer but not with the old technologies used in business by entrepreneurs. According to Chris (2012) the growth of personal computer and computer networks continues to impact businesses both large and medium. Through computer and internet connection entrepreneurs can perform administrative tasks like paying your business bills on your computer, as well as marketing your business online, e-mail and instant messaging allow for easy communication. Moreover Uchegbu (2002) pointed out that the introduction and use of internet has caused an important revolution in communication and that is capable of improving the way we communicate, study, contract and transact business. This progress in business in noted as a result of progress in the ability to link up computers.

Despite these obvious advantages opinions from the background of this study still show that entrepreneurs are not yet taping the benefits of DT in enhancing their skills. These are however opinions and there is need to verify the authenticity of the opinions. It is therefore the problem of this study to verify the extent of utilization of DT to enhance Small and Medium Scale Enterprises in South-East, Nigeria.

Purpose of the Study

The general purpose of this study is to determine Impact of Digital Technology on the Development of Small and Medium Scale Enterprises in Nigeria. Specifically, the study sought to:

Determine the extent to which entrepreneurs of medium and large scale enterprises utilize DT to create enabling business environment.
Find out the extent to which entrepreneurs of medium and large scale enterprises utilize DT in enhancing marketing of goods and services.
Determine the extent to which entrepreneurs of medium and large scale enterprises utilize DT in staff training.
identify the barriers to utilization of DT by managers of medium and large scale enterprise to enhance Small and Medium Scale Enterprises.

Significance of the Study

This study is of great significance to private enterprises because the finding would provide data that would make managers to became producers and creators in high value areas of knowledge economy. The managers would be drivers and not consumers in the global digital economy. It would expose the staff to new ways of working in the enterprise.

Government would understand the need to be proactive in exploiting DT for enterprise development. The government and international funding agencies would be interested in general development of DT in higher institutions.

Educational institution would also find that the study would benefit them in that it would expose the challenge of globalization and information age for the transformation of the academic system from traditional role of teaching, learning, research and development methodology, to DT application which is the latest revolution changing all aspects of human endeavour.

The study will enable adult education administration fill the gap of DT knowledge in the society through continuing and life long education. The findings of this study will have significant effect on the way people live, work and play in the society. Finally, future researchers would also benefit by identifying further areas to explore in DT.

Research Questions

The following research questions guide the study:

To what extent do entrepreneurs of medium and large scale enterprises utilize DT to create enabling business environment.
To what extent do entrepreneurs of medium and large scale enterprises utilize DT in enhancing marketing of goods and services.
To what extent do entrepreneurs of medium and large scale enterprise utilize DT in staff training?
What are the barriers to the utilization of DT to enhance Small and Medium Scale Enterprises by entrepreneurs of medium and large scale enterprises in South-East Zone?

Hypotheses

The following null hypotheses were formulated to guide the study at 0.05 level of significance.

There is no significant difference in the mean rating of entrepreneurs of medium and large scale enterprises on the extent to which DT are being utilized to create enabling business environment.

2 There is no significant difference in the mean rating of entrepreneurs of medium and large scale enterprises on the extent to which DTs are utilize in enhancing marketing of goods and services.

There is no significant difference in the mean rating of entrepreneurs of medium and large scale enterprises on the extent of utilizing DT in staff training.
There is no significant difference in the mean rating of entrepreneurs of medium and large scale enterprises on the barriers to utilization of DT.

Scope of the Study

The focus of the study is on Impact of Digital Technology on the Development of Small and Medium Scale Enterprises in Nigeria. This study covers the registered private enterprises in South-East, Nigeria. The study focused on utilization of DT to create enabling business environment, enhancing marketing of goods and services through DT, utilization of DT in staff training and barriers to utilization of DT. The researcher did not cover other areas o of DT utilization since the researcher believes that such areas can be carried out by future researchers.

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