Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Financial Strategies for Sustainability of Small and Medium- Sized Enterprises in Nigeria - The Education, Accounting, and Consulting Outlook

UDO Okey Okoro, AGBAI Edward Perekebina

Abstract

Although small and medium enterprises (SMEs) contribute significantly to Nigeria’s socioeconomic and political development, most of the country’s SMEs no longer operate by their fifth anniversary. Many owners lack knowledge of the financial strategies required for the long- term performance and growth of their enterprise. The aim of this qualitative multiple case study was to gain an in-depth understanding of financial strategies that SMEs owner-managers can adopt to enhance the sustainability of their business operations in Nigeria. This study was grounded in entrepreneurship theory and Porter’s model of competitive strategy. Qualitative data from multiple sources, including semi structured interviews, scholarly works, and observational field notes, were collected. The participants were six SME owner-managers who employ fewer than 200 employees within the education and accounting/consulting service sectors. Thematic analysis of data produced five themes that explained the financial strategy practices of SME owner-managers: maintaining strategic financial practices, acquisition of basic financial cum business knowledge, establish sound financial reporting system, articulating challenges of SMEs, and embracing entrepreneurial resilience. The findings revealed the need for SME owner-managers to embrace dynamism in their financial strategy practices. By doing so, SME owner-managers may be able to sustain their businesses, which may promote positive social change through job creation, wealth distribution, technological innovation, grassroots development, and enhancement of gross domestic product.

Keywords

Entrepreneurship; Education; Financial Strategy; Innovation; Sustainability; Wealth Distribution

References

Adel, G., Tarek, B. H., Affes, H., &Jarboui, A. (2016). The venture capital contribution to the financing of entrepreneurial projects: Case of Tunisian risk capital investment company (SICARS). Journal of Internet Banking and Commerce, 21(Suppl. 5), Article 004. https://www.icommercecentral.com/open-access/the-venture-capital-contribution-to-the- financing-of-entrepreneurial-projects-case-of-tunisian-risk-capital-investment-company- sicar.php?aid=79695 Ajibade, P.& Stephen M. Mutula. (2020). Promoting SMEs effectiveness through innovative communication strategies and business-IT alignment. Problems and Perspectives in Management, 18(3), 233–244. http://doi.org/10.21511/ppm.18(3).2020.20 Ancelin-Bourguignon, A. (2019). The priming role of qualitative research in constructivist management control teaching. Qualitative Research in Accounting & Management, 16(4), 463–490. https://doi.org/10.1108/QRAM-10-2017-0100 Bahri, M., St-Pierre, J. & Sakka, O. (2017). Performance measurement and management for manufacturing SMEs: a financial statement-based system. Measuring Business Excellence, 21(1), 17–36. https://doi.org/10.1108/MBE-06-2015-0034 Batrancea, I., Morar, I.D., Masca, E., Catalin, S. &Bechis, L. (2018). Econometric modeling of SME performance. Case of Romania. Sustainability, 10(1), 192. https://doi.org/10.3390/su10010192 Belas, J., Gavurova, B., & Toth, P. (2018). Impact of selected characteristics of SMES on the capital structure. Journal of Business Economics and Management, 19(4). https://doi.org/10.3846/jbem.2018.6583 Bierman Jr., H. (2001). Corporate financial strategy and decision making to increase shareholder value.West Sussex, England: Wiley Inc. Blakyta, G., Matusova, O., &Andryeyeva, V. (2018). The Role of financial strategy in the system of ensuring economic security of trading enterprises. Public Security & Public Order, 20, 19–3. https://www.mruni.eu Boddy, C.R. (2016). Sample size for qualitative research. Qualitative Market Research: An International Journal,19, 426-432. https://doi.org/10.1108/QMR-06-2016-0053 Boso, N., Danso, A., Leonidou, C., Uddin, M., Adeola, O., &Hultman, M. (2017). Does financial resource slack drive sustainability expenditure in developing economy small and medium- sized enterprises? Journal of Business Research, 80, 247–256. https://doi.org/10.1177/JBR- 2016-0012 Botta, M. (2019). Financing decisions and performance of Italian SMEs in the hotel industry. Cornell Hospitality Quarterly, 60(4), 335–354. https://doi.org/10.1177/1938965518816948 Brush, C. G., Edelman, L. F., Harrison, R. T., Hechavarria, D., Justo, R., & McAdam, M. (2018). A Gendered Look at Entrepreneurship Ecosystems. Academy of Management Annual Meeting Proceedings, 2018(1), 1. https://doi.org/10.5465/AMBPP.2018.16912symposium Coad, A., Daunfeldt, S.O. & Halvarsson, D. (2018). Bursting into life: Firm growth and growth persistence by age. Small Business Economics, 50(1), 55-75, https://doi.org/10.1007/s11187- 017-9872-8 Delkhosh,M.& Mousavi, H. (2016). Strategic financial management review on the financial success of an organization. Mediterranean Journal of Social Sciences, 7(2 S2). https://doi.org/10.5901/mjss.2016.v7n2s2p30 Eklund, C. M. (2020). Why do some SMEs become high-growth firms? The role of employee competences. Journal of Intellectual Capital, 21(5), 691–707. https://doi.org/10.1108/JIC-07- 2019-0188 Florido, J. S. V., Adame, M. G., &Tagle, M. A. O. (2015). Financial strategies, the professional development of employers and performance of SMEs (AGUASCALIENTES Case). Procedia - Social and Behavioral Sciences, 174, 768–775. https://doi.org/10.1016/j.sbspro.2015.01.613 Grant, P. (1997).How financial targets determine your strategy. Global Finance, 11( 3) 30–34. https://gbr.pepperdine.edu Hyett, N., Kenny, A., & Dickson-Swift, V. (2014). Methodology or method? A critical review of qualitative case study reports. International Journal of Qualitative Studies on Health and Well-Being, 9(0). 1-12. https://doi.org/10.3402/qhw. v9.23606 Ischenko Nina, A. (2018). The formation of financial strategy of enterprise development. Bìznes Inform, 5(484), 324–328. http://www.business- inform.net Jawad, H., Jaber, M. Y., Bonney, M., & Rosen, M. A. (2016). Deriving an exergetic economic production quantity model for better sustainability. Applied Mathematical Modelling, 40(11– 12), 6026–6039. https://doi.org/10.1016/j.apm.2016.01.042 Jindrichovska, I., Ugurlu, E., &Kubickova, D. (2013). Changes in capital structure of Czech SMEs: A Dynamic Panel Data Approach, Ekonomika a Management, 2(3), 36-49. https://doi.org/10.1177/EM-2012-0015 Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A Strategic Management Approach. EMAJ: Emerging Markets Journal, 5(1), 26–40. https://doi.org/10.5195/emaj.2015.67 Kono, P. M., & Barnes, B. (2010). The Role of Finance in the Strategic-Planning and Decision- Making Process. Graziadio Business Report, 13(1), 1–5. http://gbr.pepperdine.edu/ Kumar, S., & Rao, P. (2015). A conceptual framework for identifying financing preferences of SMEs. Small Enterprise Research, 22(1), 99–112. https://doi.org/10.1080/13215906.2015.1036504 Lim, D. S. K., Oh, C. H., & De Clercq, D. (2016). Engagement in entrepreneurship in emerging economies: Interactive effects of individual-level factors and institutional conditions. International Business Review, 25, 933-945. https://doi.org/10.1016/j.ibusrev.2015.12.001 Liu, L., Huang, Y. & Zhan, X. (2019). The evolution of collective strategies in SMEs? innovation: A tripartite game analysis and application. Complexity, 1–15. https://doi.org/10.1155/2019/9190273 Maksy, M. M. (2019). Is free cash flow value relevant? The case of the U.S. financial institutions sector. Journal of Accounting & Finance,19(9), 10–22. https://doi.org/10.33423/jaf. v19i19.2692 Mashizha, M., Sibanda,M., &Maumbe, M. (2019). Financial literacy among small and medium enterprises in Zimbabwe. The Southern African Journal of Entrepreneurship and Small Business Management, 11(1), e1-e10. https://doi.org/10.4102/sajesbm.v11i1.241 Maxwell, J. A. (2021). Why qualitative methods are necessary for generalization. Qualitative Psychology, 8(1), 111–118. https://doi.org/10.1037/qup0000173 Megyeri, E. (2019). Uncertainty and risk management: Post-Crises Changes in attitudes of Hungarian SMEs. Journal of Accounting & Management, 9(1), 15–30. www.eco.u-szeged.hu Molodykh V. A., &Rubezhnoy A. A. (2017). Tax Compliance and the Choice of an optimum strategy for the economic agents. Journal of Tax Reform. 3(3), 216–225. http://dx.doi.org/10.15826/jtr.2017.3.3.041 Offiong, M. I., Udoka, C.O., & Bassey, J.G. (2019). Financial risk and performance of small and medium enterprises in Nigeria. Investment Management & Financial Innovations, 16(4), 110- 122 . https://doi.org/10.21511/imfi.16(4).2019.10 Okundaye, K., Fan, S. K., & Dwyer, R. J. (2019). Impact of information and communication technology in Nigerian small-to medium-sized enterprises. Journal of Economics, Finance & Administrative Science, 24(47), 29–46. https://doi.org/10.1108/JEFAS-08-2018-0086 Onica,C.M. (2019). Economic Value Added (EVA) as an Indicator for Financial Decisions. Annals of Dunarea de Jos University. Fascicle I: Economics and Applied Informatics, 25(3), 149–156. https://doi.org/10.35219/eai1584040967 Organisation for Economic Co-operation and Development. (2018a). Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard. OECD Publishing. www.oecd.org Panic, D. S. (2017). Performance and financing strategies of female and male entrepreneurs in the Republic of Serbia, International Journal of Gender and Entrepreneurship, 9(2), 135-156. https://doi.org/10.10.1108/IJGE-08-026-0029 Patton, M. Q. (2015). Qualitative research & evaluation methods: Int

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT

Bridging Legal, Financial, and Data Governance in Enterprise AI: Emerging Trends

Author: Funmilayo Ashore-Onisemo, Ebehiremen Faith Iziduh, Uchechi Mary-Linda Unamma, Ifeanyichukwu Jeffrey Okwesa

Macroeconomic Policies and Economic Stability in Nigeria

Author: Abel-Tariah Emmanuel Onate, Okon, Ekanem Nsikhe, Nwenyi Francis Onwe

Determinants of Bank Liquidity in Nigeria

Author: Nelson Johnny Ebifemo-ere Stephen