DETERMINANTS OF ATTRITION IN SMALL AND MEDIUM TEXTILE ENTERPRISES IN NIGERIA
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ABSTRACT
This study focused on attrition determinants of textile (SMES) in Nigeria. The study became necessary because the textile industry in Nigeria which was the second largest employer of labour after government declined in productivity rapidly and between 1995 and 2003, 83 textiles closed shop.
The main objective of this study therefore is to investigate the determinants of attrition of textile SMEs in Nigeria. Past studies have focused on firm success, with only few on firm attrition. Again most studies of firm longevity have focused on large firms. The problem is more acute from Nigerian sources.
This study reviewed both the theoretical framework and conceptual framework employing independent variables such as government policy, managerial skills, marketing, technology and finance, while the dependent variable is the “attrition of textile SMEs” to examine the past empirical studies.
The study identified a gap, since the past studies were not firm specific and did not compare failed and standing firms. This present study focuses on the SME textile sub-sector. The study will be conducted in six textile zones of Kaduna, Kano, Lagos Aba, Onitsha and Asaba. These geographical areas have the largest concentration of textile firms in Nigeria.
The study will compare the failed textile SMEs with those standing. The findings of this study can therefore be grossed up to national level. The collapsed SME firms and those standing whose list is with the textile manufacturers association located at No. 4 Kachia Road Kaduna forms the sampling frame.
Purposive sampling will be used to enlist 3 entrepreneurs each for both failed and standing firms and 10 senior managers of failed and 3 senior managers of standing firms for a pilot study. A snow-balling method will be employed to enlist the 273 top/senior executives of the sampled failed firms while a simple random sampling will be employed to enlist 100 executives of standing firms for the administration of a four point likert questionnaire. Both qualitative and quantitative data will be generated through depth-interviews and questionnaire administration.
The interview will be analyzed through content analysis while principal component analysis will be applied on the survey data to arrive at the findings. Also, independent sample t-test will be conducted to address hypothesis 1 to 4, by making comparison between the failed and functional textile firms in Nigeria.
TABLE OF CONTENTS
CONTENTS PAGE
Title page – – – – – – – – – i
Declaration – – – – – – – – – ii
Dedication – – – – – – – – – iii
Acknowledgement – – – – – – – iv
Abstract – – – – – – – – – v
Table of contents – – – – – – – – vi
List of Tables – – – – – – – ix
List of figures – – – – – – – x
Abbreviations & Acronyms – – – – – – xi
CHAPTER ONE: INTRODUCTION – – – – 1
1.1 Background of the Study – – – – – – 1
1.1.1 Small and Medium Enterprises – – – – 3
1.1.2 Attrition – – – – – – – 6
1.1.3 Textile Industry – – – – – – 7
1.1.4 Small and Medium Textile Industry in Nigeria – 8
1.2 Statement of the problem – – – – – 9
1.3 Objectives of the Study – – – – – – 10
1.3.1 General Objectives – – – – – 10
1.3.2 Specific Objectives – – – – – 10
1.4 Research hypothesis – – – – – 11
1.5 Significance of the study – – – – – – 12
1.6 Scope of the study – – – – – – – 12
1.7 Limitations of the study – – – – – – 13
1.8 Definition of terms – – – – – – 14
CHAPTER TWO: LITERATURE REVIEW – – – 17
2.1 Introduction – – – – – – – 17
2.2 Theoretical Review – – – – – – 17
2.2.1 Technology – – – – – – – 19
2.2.2 Marketing – – – – – – – 25
2.2.3 Managerial Skills – – – – – – 35
2.2.4 Finance – – – – – – – 41
2.2.5 Government Policy – – – – – 44
2.2.6 Attrition/Failure – – – – – – 50
2.3 Conceptual Framework – – – – – – 54
2.4 Review of Important Literature – – – – – 59
2.4.1 Technology – – – – – – – 59
2.4.2 Marketing – – – – – – – 66
2.4.3 Managerial Skills – – – – – – 74
2.4.4 Finance – – – – – – – 82
2.4.5 Government Policy – – – – – 87
2.4.6 Attrition/Failure – – – – – – 96
2.5 Empirical Review – – – – – – – 98
2.5.1 Technology – – – – – – – 99
2.5.2 Marketing – – – – – – – 105
2.5.3 Managerial Skills – – – – – – 106
2.5.4 Finance – – – – – – – 111
2.6 Attrition – – – – – – – – 116
2.7 Critique of Review – – – – – – 120
2.8 Research Gap – – – – – – 122
CHAPTER THREE: RESEARCH METHODOLOGY – 123
3.1 Introduction – – – – – – – 123
3.2 Research Philosophy – – – – – – 123
3.3 Research Design – – – – – – – 124
3.4 Study Population – – – – – – – 125
3.5 Sampling Techniques – – – – – – 125
3.6 Data Collection Procedure – – – – – 127
3.6.1 Interviews Schedule – – – – – 128
3.6.2 Questionnaire – – – – – – 128
3.6.3 Validity of the Research Instruments – – – 130
3.7 Pilot Study – – – – – – – – 131
3.8 Administration of Research Instruments – – – 132
3.9 Data Processing and Analysis – – – – – 132
3.9 Ethical Issues – – – – – – – 134
References
Appendices
Appendix I. – Introduction Letter
Appendix II. – Interview Schedule & Questionnaire
Appendix III. – Working Plan
Appendix IV – Budgeting
Appendix V – Association Members mills that closed since 1995
Association Member mills that are still standing
Appendix VI – Main qualitative indicators that may be used to differentiate between SMEs and large companies
Appendix VII – Non defined population optimal sample size calculation
LIST OF TABLES
Table 2.1: Causes of Failure – – – – – – – 76
LIST OF FIGURES
1.1 Enterprise Life Cycle 6
2.1 Conceptual Model for Technology Acceptance 19
2.1.2 TAM Application 20
2.1.3 A Model of Five Stages in the Innovation-Decision Process: Diffusion of Innovations 23
2.1.4 A Basic Task-Technology Fit Model 25
2.1.5 A Schematic Model of the Resource Advantage Theory of Competition 30
2.1.6 A Schematic Model of the Extended Resource Advantage Theory of Competition 31
2.1.7 The Three Circles of IMC Theory Development 34
2.1.8 Contingency Model 38
2.1.9 Moderated Relationship among Variables 57
2.10 Conceptual Framework Model 58
2.11 The Textile Chain 61
2.12 Managerial Skills required by Managers 79
ACRONYMS AND ABBREVIATIONS
BDS Business Development Services
CBN Central Bank of Nigeria
FOS Federal Office of Statistics
GDP Gross Domestic Product
MSME Micro, Small and Medium Enterprises
PRISMS Promoting Improved Sustainable Micro Finance Service
R & D Research and Development
SME Small and Medium Enterprises
SMEDAN Small and Medium Enterprises Development Agency of Nigeria
SMEEIS Small and Medium Enterprises, Equity, Investment Scheme
SPSS Statistical Package for Social Sciences
U.K United Kingdom
UNIDO United Nations Industrial Development Organization
USA United States of America
OECD Organization for Economic Cooperation and Development
NEPAD New Partnership for Africa’s Development
AGOA African Growth and Opportunity Act
ECA Economic Commission for Africa
ICT Information and Communication Technology
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The world’s leading textile country is China which holds approximately 45 percent of global textile and garment production, while India holds a share of around 20 percent and yet in both countries, their textile SMEs are the biggest contributors to the National economy (National Union of Textile Garments and Tailoring Workers of Nigeria Publication 2008).
The textile industry belongs to the so-called first generation industry. The textile industry in Nigeria was the third largest in Africa after Egypt and South Africa. (Eneji, Onyinye, Kennedy, & Rong, 2012). The global textile and garment market is valued at around $400 billion which is an interesting figure that attracts entrepreneurs from around the world to venture e into the sphere (http//www.com.ng).
Unfortunately, for the African sub-continent and for Nigeria in particular, the trade has not been profitable because of the state of its textile industry, and also with particular reference to its textile SMEs (Aguiyi, Ukaoha, Onyegbulam & Nwankwo, 2011). The modern textile industry in Nigeria, typically represents simple input substitution industrialization of the post-colonial state (Aremu 2003).
The sector in the past was the largest employer of labour after government as it employed over one million Nigerians either directly or indirectly and secured 250,000 tons of raw cotton for growers (Umar, 2008). While a large number of African countries are further taking advantage of the opportunity thrown open by African Growth and Opportunity Act (AGOA) and other preferential trade concessions, the Nigerian industry is still grappling to find a space in the international market.
A former Minister of communications; Audu Ogbe captured the picture when he said:
The private sector which should indeed be the engine of growth is encumbered by impossible obstacles. For about 18years now, industrial growth has almost come to a half, not only are new industries impossible to establish, most old ones have nearly all shut down. (Quoted in Umar, 2008).
By and large, the contribution to economic development by small and medium enterprises which is the segment under study is not in doubt. The best estimates available, suggest that MSME comprise 87% of all firms operating in Nigeria, although the total number of registered firms is unknown (Oyelaran-Oyeyinka, 2011). The scenario is that if the general industrial outlook is bleak, the segment under study could equally be affected and it raises fears.
Generally, it is believed that firms survival is at least in the long run a prerequisite for success which is often measured in terms of market share or profitability. To date, however, studies of firm longevity have focused on large companies (Pasanam 2003). For the Nigerian, small and medium textiles, there has been practically no empirical study so far undertaken. Public commentaries on the state of the Nigerian textiles cannot provide the desired solution, and thus calls for proper investigation.
A preliminary interview with a senior lecturer in the department of textile technology of Kaduna Polytechnic on the dearth of local works, hinted that the students and the general academic population to sustain such works has diminished considerably (Raji, 2011).
1.1.1 SMEs
The Small and Medium Sized Enterprises (SMEs) are heterogeneous and can be found in a number of business activities. They may embody different levels of skills and maybe found in either the formal or informal economy. (OECD, 2004).
SMEs definition can be broadly categorised into two: economic and statistical. Under the economic definition, a firm is regarded as small, if it has a relatively small share of the market, and is managed by owners in a personalized way and not through the medium of a formalized management structure; while statistical definition varies by country and is usually based on the number of employees, and the value of sales and/or value of assets (Makenbe, 2011). Due to its ease of collection however, the most commonly used variable is the number of employees (OECD, 2004).
Small and medium enterprises contribute substantially to output and employment in both developed and developing countries. Recent empirical studies show that SMEs contribute to over 55% of GDP and over 65% of total employment in high-income countries. Similarly, they contribute 60% of GDP and over 70% of total employment in low income countries, while they contribute over 95% of total employment and about 70% of GDP in middle-income countries (OECD, 2004).
A comparison of SMEs in different developing countries shows that there is no uniformity in the definition (Khrystya, Melina, & Rita, 2010). The major indices used, however are number of employees and net worth. In Thailand, any manufacturing outfit that employs less than 50 workers is regarded as a small enterprise, while those employing between..
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