External Business Environment and Entrepreneurial Performance of Small and Medium Enterprises in Enugu State.

Abstract

The external business environment was found to influence the entrepreneurial performance of small and medium enterprises (SMEs) in Enugu State. This study examined the relationship between the external business environment and the entrepreneurial performance of SMEs in Enugu State. The study population consisted of SMEs registered with the Small and Medium Enterprises Development Agency of Nigeria in Enugu State, totaling 1,366 SMEs. Using the Taro Yamane formula, a sample size of 309 respondents was determined. The owners/managers of these SMEs were selected through a multi-stage sampling technique, which included stratified, proportionate, and simple random sampling methods. Data were collected through coded instruments and analyzed using descriptive and empirical methods. Regression analysis was employed to test the hypotheses, with SPSS Version 25. The results showed that the economic environment had a positive effect on the sales turnover of SMEs (R² = 0.999; p = 0.000 < 0.05). The socio-cultural environment had a positive effect on the profitability of SMEs (R² = 0.980; p = 0.003 < 0.05). However, the political environment had a positive but non-significant effect on the expansion of SMEs (R² = 0.961; p = 0.065 > 0.05). In conclusion, both the economic and socio-cultural environments significantly impacted the sales turnover and profitability of SMEs, respectively, while the political environment had no significant effect on the expansion of SMEs in Enugu State. The study recommended that SME owners/managers develop a positive perception of the economic environment, as consumers increasingly influence the economy. By producing quality goods that meet customer demands, SMEs can enhance their business performance.