Research Article: 2023 Vol: 22 Issue: 2
Muhammad Baffa Sani, Bayero University
Ibrahim Garba Muhammad, Bayero University
Mu’azu Hassan Mu’azu, Bayero University
Citation Information: Sani, M.B.,Muhammad, I.G., & Mu’azu, M.H. (2023). Examining the entrepreneurial perspective and performance of ‘indigenous’ domestic manufacturing firms in Kano state, Nigeria. Academy of Strategic Management Journal, 22(S2), 1-10.
This study examines relationship between entrepreneurial perspective (EP) and performance of ‘indigenous’ domestic manufacturing firms (IMFs) in Kano State, Nigeria, using multiple regression models. A survey method was adopted. Questionnaire instrument was administered on a census based sampling of 179 IMFs. 152 copies (85%) of the administered questionnaire were returned. However, due to data screening and cleaning, analysis was made on 125 IMFs (70% of total copies of questionnaire distributed). The study discovers strictness to routine significantly affects the IMFs’ performance. Statistically, it influences performance by 57.3%. Thus, this study recommends the IMFs-on individual basis-to acquire managing change skills; frequent management trainings to be regularly organised by their associations; join hands to wholly pursue policies that promote and protect private sector interests. In addition, to reconfirm the authenticity and implication of EP on firm performance, study to examine relationship between the EP and the closed IMFs, in the same study area is highly suggested by this research. The study would give insight as regards relatedness to the closure of the firms.
Entrepreneurial perspective, Performance, Indigenous, Domestic, Manufacturing Firms.
Domestic manufacturing firms are the key to nations’ sustenance. Without domestic manufacturing, local materials as well as indigenous labour utilisations are hampered. Thereby, results to socioeconomic crises (Bodrud-Doza et al., 2020; Impalure & Dore, 2020). Thus, manufacturing remains the defining feature of nations’ development, while its performance is the antidote to socioeconomic crises (Andreoni & Gregory, 2013).
Firm performance is a function of efficacy and efficiency, manifested in vigour and vitality (Taouab & Issor, 2019). However, environmental changes have exposed business to negative performance experiences (Ehinomen & Adeleke, 2012). Thereof, to salvage firm’s performance, entrepreneurial perspective (EP) is inevitable (Gerber, 1995). It posits firm’s preference to entrepreneurship and leads to superior performance outcome (Kuratko & Hornsby, 2018; Kiyabo & Isaga, 2020; Indriarti et al., 2020). Basically, it is the business concept that differentiates firms (Kiyabo & Isaga, 2020).
Regardless of mixed results on manufacturing performance in Nigeria, the sector is one of the best sectors with 9.2 % contribution to GDP. However, the sector is relatively not doing well in the North, despite huge potentials for viable indigenous manufacturing performance. It has fallen short of expectation, as significant progress has not been observed (Sani, 2017); especially, among indigenous manufacturing firms (IMFs). For example, while the effect of environmental factors is common to businesses particularly, those that operate in the same market (Tsauni & Adamu, 2016), ironically, non-indigenous manufacturing firms flourish and are getting headlines at far with IMFs in the same local market (Sani, 2017; Maiyaki, 2013); and the menace has persisted (African Development Bank, 2019). By implication, a need to examine the IMFs’ EP is highlighted.
It is based on the above need this paper seeks to investigate the EP of the IMFs in Kano State, Nigeria, in attempt to examine relationship with the performance of the subsector.
Kano is chosen as the focal of this study, because it is the commercial hub and the most industrialised state of the North, as well as the largest non-oil and gas economy of Nigeria. In addition, for centuries, it has served as the economic nerve centre of the whole western Sudan. Thence, it reflects Northern economy and its issue is a test case for the entire Northern states (Liman, 2017; Sani, 2017). Moreover, it is a ‘victim’ as well; it has lost over 50% of manufacturing industries and those in operation are faced with low level capacity utilisation (Kano State Industrial Survey, 2019; Agbede, 2020).
Performance indicates functioning. It is used to determine business accomplishment and fulfilment. Without it, business survival is periled (Taouab & Issor, 2019). Thus, performance becomes the objective of every firm. Though, the term remains relative, it defines wellness of a firm and results to profits; market expansion; customer satisfaction; increase in sales; employee satisfaction and social performances (Zanotti et al., 2018). Thus, failure to perform jeopardises firm’s survival.
Profit generation is the key result of enterprise operation (Velyka & Zasukha, 2019). It becomes the pillar and critical to every firm’s existence. Specialisation, differentiation, segmentation, concentration, focus and cost consciousness are paramount for firm to significantly grab its share in the market (Tracy & Tracy, 2014). Market share and business profitability are significantly related (Etale et al., 2016).
Market expansion signifies growth. Without growth, business is condemned to obsolescence (Maxwell, 2003). Flexibility is the key to growth. It influences continuous flow of changes, differentiation and helps in overcoming limitations with regards to resource and other technical insufficiencies (Olusola, 2012; Tracy & Chee, 2013).
Customer satisfaction and increase in sales represent relevance creation. Relevance posits value, which to customer is the utility of business offer (Tracy, 2015). It is primarily a psychological phenomenon (Wilson, 2016). Thence, for business offer to have value and customer acceptability, affective and cognitive effect on customers’ problem is indispensable. This enhances customer satisfaction, wellbeing and revisit intention (Chan, 2019). Therefore, firm needs to position itself in a way that customer perceives effectivity of what it offers (Tracy, 2015).
Employee satisfaction implies employee’s positive feeling on a job (Robbins & Judge, 2009). It has direct influence on customer decision in dealing with firm’s offer (Ey & Yazdanifard, 2014). Thus, satisfied worker is akin to satisfied customer. Employee satisfaction significantly relates to service quality and to customer satisfaction (Yee et al., 2008). Meanwhile, satisfied employee is more productive than unsatisfied employee (Robbins & Judge, 2009). Lack of satisfaction negatively affects employee commitment, resulting to absenteeism, turnover and deviant workplace behaviour (Ahmad & Raja, 2021). Training, variety, independence and control stimulate satisfaction to most employees (Robbins & Judge, 2009).
Social performance is doing business in line with accepted social values. The selected activities associated with social performance dimension include safe environmental practices, enhanced product quality and safety, ethical advertisement, employment to minority and development of social projects.
Entrepreneurial Perspective (EP)
Not all firms are truly entrepreneurial. Thus, two mutually exclusive perspectives shape enterprise attitude. They are the technician perspective (TP) and EP (Gerber, 1995). EP involves firm’s recourse to high sense of responsibility and internalization (Robbins & Judge, 2009). Thus, EP enhances firm’s creative ability to shape and influence business environment, instead of being passive and constant wishes for good (Di Muro & Turner, 2018; Smith, 2008). EP induces change and progress and stimulates direness to go forward. TP on the other hand, inhibits change and promotes status quo (Gerber, 1995). EP firms consistently search and assess problems and persistently devise means to solve the problems, minimise risks and seize opportunities. Despite variable belief systems, EP firms take primacy in entrepreneurial model to engage in search and actions, to potentially disrupt existing systems (Smith, 2008).
EP generally posits firm’s preference to entrepreneurship. Entrepreneurial spirit is institutionalised within a firm’s framework and manifested on firm’s environment (Kuratko & Hornsby, 2018). It exposes firm to bold opposition to routines and strictness, and excites vigour, ‘entrepreneurial’ intelligence and ambitions (Fayolle & Basso, 2010). As such, EP firms consider boldness as the first thing in business (York et al., 2013). It often boosts keenness in the management of new situations, quick starting and rebuilding particularly, when firm is confronted with failure (Beech, 2018). EP is therefore, absolutely necessary for the creation of a great, growing business (Gerber, 1995).
According to Gerber (1995), EP and TP differ in the following six ways:
i) EP looks for how must business work; TP focuses on work that has to be done (routine)
ii) To EP, business is a system for producing outer-directed results for profits; TP sees business as a place to produce inner-directed results, resulting in income.
iii) The EP starts with a picture of a well-defined future and then works to change the present to match the future. The TP starts with the present, sees the future as uncertain, and hopes to keep the future much like the present.
iv) EP envisions business in entirety first, and then derives the parts from that. The TP sees the business first in its parts and then puts them together to form a whole.
v) The EP is an integrated vision of the world. The TP is a fragmented vision.
vi) In the EP, the present-day world is modeled after the entrepreneur's vision. In the TP the future is modeled after the present-day world.
Therefore, to achieve the objective of the study, this study adapts the Gerber’s (2016) description of EP firms. Thus, the following hypotheses are formulated:
1. Strictness to routine has significant relationship with Kano IMFs’ performance.
2. Doing business for personal satisfaction significantly affects Kano IMFs’ performance.
3. Inept skill of present-future match has positive effect on Kano IMFs’ performance.
4. Narrow view of business significantly affects Kano IMFs’ performance.
5. Fragmented Kano IMFs’ vision has significant relationship with performance.
6. Modeling business future after present-day has significance to Kano IMFs’ performance.
Theoretical Underpinning: Self-Responsibility Theory
This study is underpinned by Self-Responsibility Theory. Sense of self-responsibility influences person’s attitude, behaviour and action (Blackwood et al., 2003). Thus, the higher the level of sense of self-responsibility, the more action oriented behaviour is developed and skills and competences enhanced (Robbins & Judge, 2009).
The theory fits this study because, from the review of literature, there is significant relationship between EP, sense of responsibility and deliberate actions. Therefore, firms with high sense of responsibility, to a greater precision would be prone to taking deliberate action to influence business environment and performance outcome; have outer-directed view; have well-defined future and skill to match present with the future; envision business in entirety; have an integrated vision; and model the present-day world after firm’s vision.
Cross sectional survey design was conducted to assess the hypothesised relationship using a questionnaire instrument with the aid of R statistics. The study examines the relationship: Y=f (X1 X2 X3 X4 X5 X6).
Where Y=IMFs’ performance (dependent variable (DV)). It was measured by market shrinkage, sales, profitability, customer loyalty and decrease, employee complaints, downsizing and social projects.
EP (IV) was examined by x1, x2...x6. X1=strictness to routine; X2=business for personal satisfaction; X3= inept skill in present-future match; X4=narrow view of business; X5=ragmented vision and X6= modeling future after present-day.
Diagrammatically, it depicts in Figure 1:
Reliability and Validity of the Instrument
To determine the reliability of the scale, Cronbach’s alpha coefficient was used. The closer the average correlation among items to 1 the stronger the reliability (Zar, 1999). Therefore, strictness to routine, business for personal satisfaction, skill in present-future match, narrow view of business, fragmented vision and future-present modeling have 13, 6, 3, 4, 2 and 2 respectively.
According to Table 1, the reliability coefficient of the variables is strong; all have attained high reliability coefficient, based on the recommended yardstick of 0.70 (Sekaran & Bougie, 2010).
Reliability Of The Construct Using Spss Version 20
|Construct||Number of Items||Cronbach Alpha’s Value|
|Strictness to routine||13||0.825|
|Business for personal satisfaction||6||0.846|
|Skill in present-future match||3||0.857|
|Narrow view of business||4||0.725|
Source: Pilot study, 2022
Lawshe’s method for determining construct validity by subject matter expert raters (SMERs) by responding to the following question for each item: "Is the skill or knowledge measured by this item 'essential,' 'useful, but not essential,' or 'not necessary' to the performance of the construct?" was used. 88% of the SMERs indicated essentiality of the constructs and obviously, greater levels of construct validity exist as larger numbers of panelists agree to item essentiality (Shuttleworth, 2009).
Population and Sampling
The population of the study consists of the operating IMFs identified by Kano State Industrial Survey (2019). It is the current compilation that officially reveals the industrial businesses that have operated in Kano. Thus, 179 IMFs were identified from the Survey. The study adopts census based sampling approach. Part of the advantages of this approach is the increase in confidence level and it is most appropriate particularly, if the population is few and limited (Hilman & Kaliappen, 2015). Hence, a total of 179 copies of questionnaire were administered to the managing directors (MDs)/chief executive officers (CEOs) of the entire 179 IMFs. The sample was drawn mainly from the MDs/CEOs, because they are responsible for managing overall firm performance.
Out of the 179 copies of the questionnaire administered, 152 copies were returned; achieving a response rate of 85%. However, in the process of data screening and cleaning, 27 copies were removed from the data set as univariate and multivariate outliers. Hence, a total of 125 copies of the questionnaire (representing 70% of the total copies distributed) were used for the analysis.
Multiple Regression Analysis (R) using SPSS version 20 was employed in the data analysis. R is appropriate in predicting value of a variable based on the value of two or more other variables (Laerd, 2013; McDonald, 2009). Furthermore, R has the advantage of considering the impact of multiple variables at once (Gallo, 2015).
The descriptive statistics shown in Table 2 above indicates that majority of the respondents are male (90.4%). This indicates domination of men in business and management positions in the study area. It may not be unrelated to culture and religion of the predominant people that make women stay mostly indoor. The age range of 45 to 55 years (39.2%) has the highest frequency. Meanwhile, 56.8% of the respondents have first degree or its equivalent. The duos reveal that the respondents are in active life stage and have the required experiences and education to understand the questionnaire and respond appropriately. Though, none of the respondents has PhD notwithstanding, each has at least diploma or equivalent. 40.8% have spent 15-25 years on management position, which further suggests that they have good knowledge of managing. Meanwhile, the statistics indicates short life of manufacturing business in the study area. Less than 1% of the examined IMFs reached 45 years of existence and 42.4% are sole proprietors; which may contribute to their short life span due to limitations of sole proprietorship form of business.
Demographic Profile Of The Respondents (N= 125)
|Less than 35 years||12||9.6|
|35 to less than 45 years||27||21.6|
|45 to less than 55 years||49||39.2|
|55 to less than 65 years||32||25.6|
|65 years and above||5||4|
|Diploma/NCE or Equivalent||22||17.6|
|HND/First Degree or Equivalent||71||25.6|
|Period in management position|
|Below 15 years||37||29.6|
|15 and below 25 years||51||40.8|
|25 and below 35 years||32||25.6|
|35 and below 45 years||5||4|
|45 years and above||Nil||0|
|Establishment of the firm|
|Below 15 years||58||46.4|
|15 and below 25 years||34||27.2|
|25 and below 35 years||25||20|
|35 and below 45 years||7||5.6|
|45 years and above||1||0.8|
|Nature of the firm|
Source: Field survey, 2022
ANOVA provides global assessment of statistical difference in R statistics to indicate joint significance of variables, to determine acceptability or otherwise of a model. F-value and level of significance are used to determine the effect. F-value ranges from 0 to an arbitrarily large number. The higher the F-value the lower the corresponding level of significance. Table 3 indicates higher F-value. Hence, P-value shows significant relationship (P<0.001), which shows that the regression fit is acceptable.
|Model||Sum of Squares||df||Mean Square||F||Sig.|
Note: a. Dependent Variable: Performance;
b. Predictors: (Constant), strictness to routine, business for personal satisfaction, present-future match, narrow view of business, fragmented vision, future-present modelling
According to Table 4, the predictors explain 34.6% variability in Kano IMFs’ performance. This shows substantial value, in line with the suggestion of Cohen (Gorondutse & Hilman, 2014). However, it indicates presence of other factors that account for variance on the DV. Meanwhile, the model indicates no autocorrelation, as it falls within the Durbin-Watson’s acceptable range of 1.5–2.5.In a nutshell; the tables above have ascertained goodness of fit of the examined relationships. However, the results of the investigated relationships are shown in Table 5 below.
|Model||R||R square||Adjusted R Square||Std. Error of the Estimate||Change Statistics||Durbin-Watson|
|R Square Change||F Change||df1||df2||Sig. F Change|
1.Predictors: (Constant), strictness to routine, business for personal satisfaction, present-future match, narrow view of business, fragmented vision, future-present modeling
2.Dependent Variable: Performance
Table 5 confirms only the predicted relationship between strictness to routine and Kano IMFs’ performance. Thus, hypothesis 1 is accepted and all other hypotheses rejected. The result shows only the strictness to routine has values that statistically determine relationship. The values are the t and significance (p). As the rule of thumb, t and p values must be ≥ ±1.96 and ≤ .05, respectively. In this study, t-value is 3.834 and p .000. Meanwhile, presence of positive standardised Beta coefficient (β) and positive t-value indicate the relationship is positive. The β argues strictness to routine affects IMFs’ performance by 57.3%.
|Model||Unstandardized Coefficients||Standardized Coefficients||t||Sig.|
|Strictness to routine||0.843||0.22||0.573||3.834||0|
|Business for personal satisfaction||-0.028||0.229||-0.036||-0.12||0.904|
|Skill in present-future match||0.101||0.177||0.099||0.571||0.569|
|Narrow view of business||0.118||0.251||-1.09||0.471||0.638|
a.Dependent Variable: Performance
Therefore, the study narrates, averagely, IMFs in Kano focus on work that has to be done; basically, the routine and convenience. By implication, they are prone to mundane, instead of being curious to what makes business works in all situations. The finding is perhaps critical though, not surprising. Getting out of routine and convenience in business requires some form of training. However, 86% of the examined IMFs indicate inability to frequent management trainings. It is through such trainings change management skills and new perspectives of business pursuit are learnt.
The central challenge of today’s business is sustenance, guaranteed by EP. It is the perspective that influences firms to take charge and proactively transform business models to influence environment and outcome, as opposed to passivity and reactivity. Though, this study establishes only one relationship out of the six hypothetical relationships, notwithstanding, the model is suitable for explaining and understanding the problem, i.e., the IMFs’ epileptic performance in Kano State, Nigeria.
The finding proposes that EP dimensions are interrelated and intertwined. For firm to experience positive impact of EP, according to the finding, it must imbibe and institutionalise all the dimensions throughout. Having an integrated vision or outer perspective for example, it is not enough unless firm implements the other dimensions. For example, going beyond the routine and comfort zone to proactively take actions and influence ‘desired’ outcome. Otherwise, a firm would invariably undergo performance crises, mostly manifested in redundancy, distress and to some extent, total closure.
Therefore, to reverse the daunting performance of Kano’s IMFs, this study recommends the followings:
i) IMFs in Kano should know that change is the rule of today’s business. Hence, managers globally live by the slogan change or die! Thus, they are not exceptional. Trying the unknown and going beyond comfort zone are part of the contemporary business. Therefore, each of the IMFs in Kano should-on individual basis-strive to acquire change management skill. It facilitates learning on change initiations, proactiveness, exploring the unknown, risk taking and mitigation skills.
ii) To be relevant in today’s world of business, continuous learning and personal development to acquire flexibility skills and other managerial competencies are necessary. Thus, MDs/CEOs of IMFs in Kano need to frequent management trainings to abreast new insights of business management. This can be achieved through regular organisation of seminars, workshops, conferences or symposiums by the IMFs’ associations such as the Manufacturers’ Association of Nigeria (MAN) or National Association of Small Scale Industrialists (NASSI), as example.
iii) People are responsible for their own fates and there is always power in number. Hence, IMFs in Kano should join hands and wholly pursue policies-that promote and protect private sector interests-from government, at all levels.
Suggestions for Further Studies
To reconfirm the authenticity and implication of EP on firm performance, study to examine relationship between the EP and the closed IMFs, in the same study area is highly suggested by this research. The study would give insight as regards relatedness to the closed firms. According to Beech (2018) EP often boosts keenness in the management of new situations, quick starting and rebuilding particularly, when firm is confronted with failure.
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Received: 21-Aug-2022, Manuscript No. ASMJ-22-12479; Editor assigned: 22-Aug-2022, PreQC No. ASMJ-22-12479(PQ); Reviewed: 01-Sep-2022, QC No. ASMJ-22-12479; Revised: 20-Dec-2022, Manuscript No. ASMJ-22-12479(R); Published: 27-Dec-2022