Capacity Building and Small and Medium Enterprises’ Performance in South West, Nigeria

Abstract

This study examined the impact of capacity building on the performance of Small and Medium Enterprises (SMEs) in South West, Nigeria. The study focused on two key capacity building indicators: technology adoption and innovation culture. The study adopted a survey research design. The population of the study consisted of owners/managers of SMEs and a 380-sample size was determined using the Taro Yamane formula. A Stratified sampling technique was employed to get the respondents. Data were collected with the aid of a structured questionnaire. The responses were analysed using linear regression analysis. The results showed a substantial and positive connection between SME performance and technology adoption, R = 0.875 and R2= 0.766, meaning that technology adoption accounts for 76.6% of the variance in performance. The model demonstrated high predictive accuracy (β= 0.875, F = 1233.985, p = 0.000). Also, innovation culture had a strong impact on performance, R = 0.895 and R2= 0.800, indicating that innovation practices in businesses account for 80% of performance variance. While the β= 0.895 confirmed a large impact, the ANOVA results (F = 1513.558, p = 0.000) further supported this relevance. The study concluded that capacity building, particularly technology adoption and innovation culture, significantly enhances SME performance. Specifically, SMEs that integrate
technology and promote innovation outperform those that do not. The study’s key recommendations include: investing in technology to enhance SME operations; promoting innovation and creativity among employees to drive competitiveness; and policymakers providing capacity building Support through training programmes, mentorship schemes, and innovation hubs.