EXTERNAL BUSINESS ENVIRONMENT AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KADUNA STATE: THE MEDIATING ROLE OF INNOVATION

Abstract

The aim of this study is to investigate how innovation function as a mediator in the relationship between the technology and socio-cultural environments, as well as how well Small and Medium Enterprises (SMEs) function in Kaduna State. Based on the knowledge-based theory of the company, the research aims to understand how technological and socio-cultural contexts affect the performance of SMEs. There are 495 SMEs in the state that make up the research sample. Owners and managers of particular SMEs were given questionnaires to complete in order to collect data. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to examine the data. The findings showed a strong and positive relationship between the technical environment and the performance of SMEs, as well as between the socio-cultural environment and performance of SMEs. However, innovation was found to be important in the relationship between the socio-cultural environment and the success of SMEs, but not in the relationship between the technology environment and SME performance. Therefore, in order to foster innovation and improve the performance of SMEs in Kaduna State, policies and interventions must place a high priority on the development of a favorable socio-cultural environment and the expansion of the technological landscape.