Relating External Support, Business Growth & Creating Strategies for Survival: A Comparative Case Study Analyses of Small Manufacturing Firms (SMFs) and Entrepreneurs

ABSTRACT. Using a comparative case study approach, thispaper presents three of thirty-two findings on Small PlasticManufacturing Firms’ (SPMFs) and Entrepreneurs in Nigeria.The selected firms represent performance differences betweenfirms that have received external support and those thatdid not. Due to lack of support, some entrepreneurs hadto independently sustain themselves through their creativeabilities. Findings from the study revealed that Small PlasticManufacturing Entrepreneurs in Nigeria are constrained bycertain external and internal factors. Ironically, these con-straints seem to have challenged some entrepreneurs toinvent original strategies on their own, to cope, survive andto remain in business. Lack of financial capital, especiallyforeign exchange needed to import vital operating inputs fromabroad has been the most serious constraint. Other seriousexternal constraints identified are inadequate infrastructurefacilities, competition from large firms, unfavorable govern-ment policies, dearth of machines and spare parts and paucityof raw materials. Internal obstacles like incompetent planning,poor organizational skills and limited knowledge amongothers were common obstacles faced by the entrepreneurs. Inaddition, another discovery is that funding assistance to entre-preneurs by relevant institutions concerned is not free frombias on the basis, of favoritism. It is therefore recommendedthat funding institutions should give due consideration andencouragement to promising talents. Two have especially beenidentified from the study as typical examples of potentialavant-garde entrepreneurs and such should not be neglectedor wasted. Guidance for further progress through training isanother helpful approach to take and give succor to suchadmirable talents. Entrepreneurs, who qualify for grants frominstitutions, should completely be decided on compliance to

standard selection procedures, rules and evidence of superiorentrepreneurial qualities. In addition, those who qualify forsupport should be determined only after feasible business planshave been presented.

1. Executive summary

In this article, some general distinguishing featuresof three of thirty-two selected entrepreneurs oper-ating small plastic manufacturing firms (SPMFs)in Nigeria are compared, drawn together, andsome specific comparisons and contrasts are madebetween the firms across three case studies. Issuesof identity, regional affiliation and types of entre-preneurial strategies are highlighted, as theseplayed an implicit, and occasionally explicit, rolein the selection of the SPMFs included under thecase study. The thirty-two firms in the originalstudy are divided into two major categories. Theseare those that have received external means ofsupport especially, financial assistance and thosethat hardly received any form of external supportat all. Some researchers have argued for andagainst the importance of having external supportas a means of influencing effective businessgrowth and performance (Cook, 2001; McMahon,2001; Warren and Hutchinson, 2000). This studyseeks to answer therefore, if there are any signif-icant differences in levels of performance amongthose who have received external support andthose who did not. In addition, the case of firmswithout access to support is investigated, in termsof how they would cope with the situation andwhat they would do to sustain their businesses.The paradox of whether lack of external support

Relating External Support, Business Growth & Creating Strategies for Survival: A Comparative Case Study Analyses of Small Manufacturing Firms (SMFs) and Entrepreneurs

Charles Jabani Mambula

Small Business Economics 22: 83–109, 2004. 2004 Kluwer Academic Publishers. Printed in the Netherlands.

Final version accepted on February 7, 2002

Frank E. Sawyer School of ManagementSuffolk University Boston MassachusettsU.S.A.E-mail: [email protected]

would have any significant effect on those withoutthem is therefore examined.

Two of three entrepreneurs in the studydespaired of being able to obtain loans, and soresolved to do without them. There is anotherinteresting parallel between these two firms inthe case study. As well as being only minimallyable to draw on external finance (except forsome family finance), the entrepreneurs ofthese two firms showed perhaps the highestlevel of determination to succeed in their chosenline of business. This optimism was mainly moti-vated by the desire to achieve their financialindependence and become masters of their ownbusiness empires (Bygrave, 1997; Zimmerer andScarborough, 2000; Stevenson et al., 1999). Thisquality was largely missing from most interviewswith other Nigerian SPMF owner/managers. Noneof these two entrepreneurs, however poor theactual performance of their firms might have beenat the time of the study, is afraid of failing orappeared to be discouraged. They were optimisticfor improvements in their situation for the future(Timmons, 1994; Zimmerer and Scarborough,2002). They expressed their determination tolearn from their predicaments to do better andovercome prevailing constraints (Zimmerer andScarborough, 2000). The two firms surprisinglyundaunted by the external constraints on them,pointed to their creative abilities as solutions tocope with difficult situations. This drive tosucceed seems to be informing that courage amidstconstraints is yet another outstanding quality ofentrepreneurship (ibid., 2000).

The contrast between Messieurs Enuenwosuand Daniel Obanoh’s approach compared to thatof Alhaji Manu Dauda was of course a case inpoint. Alhaji Manu Dauda was the more impres-sive in performance than the other two entrepre-neurs in terms of higher sales and profits.Although Alhaji Manu Dauda had more privilegedopportunities to get loans and faced lesser chal-lenges of competition to surmount in his businessenvironment, his performance was not very spec-tacular given the advantages in his favour. Despiteperforming less impressively in sales and profits,Mr Obanoh and Mr Enuenwosu were still able tosustain their businesses by depending more ontheir creative qualities. Enuenwosu and Obanohhad better educational backgrounds, more business

experience as well as higher entrepreneurialacumen than Alhaji Dauda did. The qualities ofthe two entrepreneurs (i.e. Enuenwosu andObanoh) have led to confirm Brautigam’s (1994)and Zimmerer and Scarborough’s (2000) obser-vations as reviewed in literature, that a backgroundin business that is long-standing is clearly anasset for entrepreneurs. Longenecker et al. (2000),would describe these two entrepreneurs as one thatfits that of the “opportunistic entrepreneur”,similar to Filley and Adalg’s (1978) classificationof the “promotion” type. Again, this kind ofentrepreneurial description is pertinent towhat Stevenson et al. (1999) referred to as the“promoter” entrepreneur. These entrepreneurs aredescribed in these ways since it makes it morelikely that they already have the basic skillsneeded to run any small business, including theability to do clerical work and keep accuraterecords. As a result, of their previous experiencesand work-related backgrounds, this observation byBrautigam, Stevenson et al., Zimmerer andScarborough & Longenecker et al. therefore,appears to be more relevant to Mr Enuenwosu andMr Obanoh as compared to Alhaji Manu Dauda.This indicates therefore, that the success of a smallbusiness will not necessarily depend on havingaccess to external support alone.

Again, the case studies on the two firms(Enuenwosu’s and Obanoh’s) because of theircreative abilities provided examples that, is fittingof a Schumpetarian type of entrepreneurship.According to Schumpeter (1934), the term entre-preneurship is synonymous to “innovation”(Berger, 1991; Stevenson et al., 1999) and whathe also refers to as, “creative response” for devel-opment (Clemence, 2000; Stevenson et al., 1999;Bygrave, 1997). Through the performance ofdifferent functions, Schumpeter notes that theentrepreneur does irrational or unusual things(Clemence, 2000). Schumpeter’s type of entrepre-neur could resemble one motivated by a drive tobuild a business venture and make a profit throughre-investment of profits, by identifying opportu-nities and skilfully assembling the necessaryresources that successfully sustains the business.

In view of the findings from this study, it isrecommended that the government and fundinginstitutions that spend enormous amounts ofmoney on small business and entrepreneurial

84 Charles Jabani Mambula

development address the constraints appropriately.It requires that an enabling environment to facil-itate their development be created (Cook, 2001).Particular areas of attention that call for immediateamelioration include constructing adequate infra-structure facilities, provision of machines andspare parts and improving standards of technicaltraining and business management (ibid.). Incertain instances, it has been observed thatexternal support, are given on basis of favouritism,nepotism or other forms of bias. This seriousadministrative flaw would have to be corrected.Entrepreneurs who qualify for funding shouldentirely be based on compliance to set standards.Presenting efficacious business plans and inter-views to determine qualification is one way ofdoing it. Feasible and attractive business planshelp to reveal how promising a venture would bebefore it is too late (Timmons, 1994; Upton et al.,2001; Perry, 2001). Entrepreneurs who show inge-nious and promising qualities should qualify.Maintaining this practice would avoid wastingpublic funds to develop high standard and suc-cessful small businesses and entrepreneurshipespecially in lesser-developed countries.

Introduction

Some business entrepreneurs believe they have astrong internal locus of control. Such entrepre-neurs are optimistic and believe that they arecapable of sustaining their own destinies andoperations by applying independent efforts fromwithin their businesses (Hisrich and Peters, 1998;Kuratko and Hodgetts, 1998; Lussier, 2000;Allen, 1999; Foley, 1999; Stevenson et al., 1999;Longenecker et al., 2000, p. 10; Chell et al., 1990).This confidence is demonstrated through theircreative skills and ingenuity in making decisionsand solving problems over threatening (externaland internal) obstacles that stand in their way.Indeed under such circumstances, entrepreneursproduce a culture (Berger, 1991) for businesssurvival. The whole point of entrepreneurialsuccess notes (Berger, 1991), is to get aroundproblems that others find impassable and thesebarriers could be institutional or technical. Thisstudy explores how some SPMF entrepreneurswere able to overcome impediments against theirventures in the challenging Nigerian business and

economic environment, thus creating their ownunique culture for survival.

This article presents and interprets a selectionof qualitative data obtained during a survey workconducted between January and March 1994, aswell as from a Pilot Project in 1992, and analysesthat data in a comparative way. The resultsobtained from 10 entrepreneurs in 1992 had littledifference when compared to the results obtainedin 1994 from 32 entrepreneurs. The principalobservation however, was that constraints appearto have become more difficult for entrepreneurs toovercome overall in 1994 than in 1992. One SPMFbusiness, a plastic shoes manufacturer known asKamer Ltd., in Lagos had to fold up his operationsin 1993 due to inability to cope with prevalentconstraints. Those who decided to remain inbusiness are only marginally surviving by all indi-cation. Responses to interviews with 32 smallplastic manufacturers have been interpreted in thelight of the main concerns expressed in smallbusiness and entrepreneurship literature, asreviewed. Reference to the following researchersamong a few others have made, giving some sig-nificant contributions to the study (Schumpeter,1934; Berger et al., 1991; Department of Tradeand Industry, 1991; Baysinger et al., 1981; Barberet al., 1992; Timmons, 1994); Scarborough andZimmerer, 1996; Bygrave, 1997; Mambula, 1997;Hisrich and Peters, 1998; Stevenson et al., 1999).Other contributors are, Advisory Council onScience & Technology (1990) (Bangs, Jr. andPinson, 1999; Lussier, 2000; Foley, 1999; Ryanet al., 1999; Allen, 1999; Megginson et al., 2000;Scarborough and Zimmerer, 2000; Longenecker etal., 2000). Particular attention is paid to factorsthat are held to influence the growth, performanceand development of SMEs and entrepreneurshipin general and in Nigeria in particular.

The idea of reviewing these case studies is toobtain a clearer understanding of how internal andexternal obstacles to and opportunities for growthinteract in practice and affect real (small) firmsand entrepreneurs in the plastics manufacturingsector. The main question this article intends toanswer is to know the kind of external and internalobstacles that limit the growth, performance anddevelopment of SPMFs and thus other manufac-turing SMEs in Nigeria. In addition, this studyfurther seeks to explain the type of difficulties

Relating External Support, Business Growth & Creating Strategies for Survival 85

faced by SPMFs, to survive and grow in Nigeriain view of external support. Cook (2000) andMcMahon (2001) are of the opinion that financialcredit is the most important form of externalsupport required for SME growth especiallyin developing countries. This study thereforeenquires the impact of the availability or for lackof external support. Does for instance, lack ofexternal support help unleash any latent skills orhidden entrepreneurial talent encouraged by thechallenge and necessity for survival? How theentrepreneurs concerned considering their dif-ferent regional backgrounds and areas of opera-tions cope with the problems confronting theirbusiness performance, growth and development(pgd) answers the underlying question. In thisarticle, the perceptions of three selected SPMFentrepreneurs who come from different back-grounds, ethnic regions and work experiences arepresented. This gives an overview of the diver-sity among SPMFs in Nigeria studied in additionto their approach for business and entrepreneurialdevelopment.

2. Research methodology

To develop an in depth understanding of smallbusinesses and since individual businesses varyin both organizational structure and in systemsof management control, it is pertinent thatmultiple-methodological approaches are pursued(Mambula, 1997; Denzin, 1994; Romano, 1989;Davidsson et al., 2001). The approach that wasused to conduct this research included both mixed-method and multi-site strategies to study 32 smallplastic manufacturing firms (SPMFs) identified inthe sample. A mixed method strategy is whenmore than one method of approach is used in datacollection, analysis, comparison or integration ofresults while conducting a research (Romano,1989). This approach is similar to what Mikkelsen(1995, p. 81) Janesick (1994, pp. 214–215) andDenzin (1994, p. 2) described as Triangulation.Triangulation according to Mikkelsen and Denzinis “the combination of methodologies in the studyof the same phenomenon”. The use of the multiplemethod strategy was adopted in order to enablethe researcher obtain in-depth information and toreduce the level of personal bias by not dependingon only one method of approach.

The researcher has collected from a variety ofsources different kinds of data, and used at leastthree methods to ensure triangulation as Janesick(1994) Denzin (1994) and Mikkelsen (1995)suggested.

These three methods are the case study method,the survey method and the use of descriptive data.Qualitative, quantitative and historical, personaldimensions on the topic under study can thus beclarified and triangulated or cross-checked.

Adopting this method of approach supportsthe authenticity of the study as there would beno other way of making genuine tests or correc-tions in case of any limitations that might beexperienced in the course of the research andwhich could also affect the validity of finalresults.

In other words, as Bouchard (1976, p. 286)noted, It would be reasonable to conclude that theuse of several methods “enhances our beliefs thatthe results are valid and not a methodologicalartefact”. Similarly, a multi-site strategy, whichwas also used for this research has been regardedas when more than one sector or institution otherthan the main sector or institution under researchis studied. In another fashion, the multi-siteapproach closely examines several homogeneousunits under research to further investigate theirvariations in-depth. More than one small plasticmanufacturing business firm has therefore beenconsidered for investigation in addition, toobtaining information from other non-SME butrelated establishments (Nachmias and Nachmias,1976). Taking this approach is to avoid the possi-bility of bias response coming from only one firmor sector. As part of the multi-method approach,both qualitative and quantitative data were used inthe research. This data was used in a variety ofways, including as earlier mentioned a case studyapproach and a detailed overview of the surveyresults in terms of a general profile and modelof Nigerian SPMFs. A participant observationapproach that involved two separate visits tothe research “habitat” of the small firms understudy in 1992 and 1994 while examining eachcompany’s historical records and data was alsoconducted. Data and records examined from com-panies included a review of growth indicators tosee if there were any changes in profits, assets,employment, sales, production and expansion in


size of space over the years since the firms wereestablished. Adopting this method helped in iden-tifying the factors that were responsible for thechanges in growth and performance observed inthe firms as at the period of study. In addition,semi-structured interviews based on open-ended,flexible questionnaires and some structured inter-views were conducted with several groups ofpeople interested or involved with the smallplastics manufacturing sector in Nigeria.

The idea behind this was to obtain some cross-referencing data and some independent confirma-tion of data, as well as a range of opinions thatwas further analysed in the main body of theresearch. The views of the following groupswere solicited: (1) Government officials whoformulate and implement policies on SME pro-motion and industrial development in Nigeria(2) Petrochemical officials responsible for rawmaterial supply to plastic manufacturers (3)Managers of large plastic manufacturing firms,since they are operating in the same sector asSPMFs (4) Representatives of development bankswho might be requested to give loans to SPMFs(5) Industrial experts and consultants who are wellinformed about the present state of the industrialsector in Nigeria and (6) Some customers whobuy plastic products as retailers to the public orto other SPMFs or larger firms. The informationobtained from interviews mainly from those con-ducted with the SPMFs managers and owners wereprocessed and presented. These were interpretedby creating tables after compiling overall per-centage measurements, and frequency distributionmeasurements.

Since semi-structured open ended interviewsprovide a lot of information that cannot be tabu-lated in these ways and may take the form ofindividual opinions expressed or comments madein response to open ended questions, the use ofqualitative methods of expression were employedwhere appropriate. Secondary sources were firstused to gain an understanding of the relevance ofexisting theories concerning the growth and devel-opment factors of small firms generally, and theirroles in the industrial and economic developmentprocess (Cook, 2001; McMahon, 2001). Secondly,empirical evidence from field based researchthrough participant observation in the firms andinstitutions visited and through in-depth semi-structured interviews were presented in severaldifferent ways. This was able to illustrate someof the general findings drawn out of the literaturereview. In particular, the concern was to placethe particular situation in the Nigerian SPMFsector in a wider context. At the practical level,case study examples were analysed in order todraw some specific conclusions as to the “bestpractice” and the varieties of “worst practice”existing among individual firms within the SPMFsector.

Categories of small businesses

Table I below from Filley and Adalg, 1978 showsthe characteristics of three categories of smallfirms from craft being the simplest to a moredeveloped promotion or mid-range level and theadministration category being the most developedstage. In a similar fashion Longenecker et al.,


TABLE ICharacteristics of small business categories

Characteristic Craft Promotion Administration

Objectives Comfort-survival Personal achievement Market adaptationPolicy Traditional Personal RationalLeadership Craftsman Entrepreneur ProfessionalStructure Power levels Field of force Rational hierarchyFunctional development Single Successive-emphasis Full developmentWork-group bonds Fixed roles Interaction-expectation HomogeneityUncertainty-risk No perceived risk Uncertainty RiskBasis for success Benevolent environment Innovative exploitation Planned adaptation to environmentPattern of growth Non-growth S curve Linear

Source: Filley and Adalg, 1978, pp. 579–580.

1997 described the three categories as beingmarginal, attractive and high potential respectivelywhile Stevenson et al., 1999, classified them alongtwo extremes as promoter and trustee. Mostinformal sector firms in less developed economiesappear to fall within the craft and promotion ormarginal and attractive categories due to the levelof their national industrial and economic devel-opment. The table below will be used to identifyand categorize the firms under this study.

Characteristics of the small firms selected forcase study

The selected SPMFs portray the range of diversityin size, ownership, background and location ofNigerian SPMFs. Basic facts and figures obtainedfrom the field research survey were used toidentify comparable firms (those which shared atleast some key characteristics), and to ensure thatthe sample was as representative as possible. Mostof the SPMFs selected are for instance typical intheir informal characteristics and are equally facedwith the same problems facing all other firms withregards to machinery, infrastructure, raw materialsand capital formation. On the other hand, they areuntypical in terms of ethnic background. The firmsmostly manifest the qualities of determinationrather than complacency in order to progressin the SPMF business. Comparisons betweenthe firms included in the three case studies isdone on the basis of a number of identified keycharacteristics as follows:

1. Characteristics of the entrepreneur; outlooks,education, professional and personal back-ground.

2. Characteristics of business setbacks (Internal).3. Characteristics of business setbacks (External).4. Characteristics of strategies adopted to over-

come Internal/External setbacks; whether the

internal and external requirements for futuregrowth and development are met.

5. Characteristics of capital and growth; type ofgrowth.

6. Crucial requirements identified by respondent.

The six essential characteristics identified abovewere obtained from the main topics reviewed insmall business literature, which was the basis onwhich the field survey results were gathered andanalysed. These materials are further used to studythe case study profiles of the SPMFs.

Nature of SPMF constraints in Nigeria

Before going into the individual case studies, itwould be appropriate to first give a general pictureof the nature of what most of the 32 SPMFsstudied in Nigeria consider to be the main con-straints on their firms’ growth and overall perfor-mance.

Thirty-two (n = 32) entrepreneurs responded tothis question and an entrepreneur could give morethan one factor as obstacle to the firm.

Impact of economic policy reform

In 1986, the Nigerian government in collaborationwith the World Bank and IMF introduced aStructural Adjustment Program (SAP) as aninstrument for economic reform, which led to thedevaluation of the national currency, the Naira.Changes were made that affected domestic fiscaland monetary policies drastically. There is generalconsensus by researchers like Cook, 2001; Schatz,1996; Lall, 1995; Hambagda, 1987, and othersas in the case of the SPMF case studies in thisarticle, that the macro-economic changes associ-ated with structural adjustment policies havereduced purchasing power, financial availabilityand level of investment generally. The level of


TABLE IIThe main growth and performance constraints of SPMFs in Nigeria

Respondent nos. Remark Percentage

23 respondents (n = 32) Finance 7214 respondents (n = 32) Infrastructure 4413 respondents (n = 32) Machines & spare parts 4111 respondents (n = 32) Raw materials 34

effective demand and especially for non-subsis-tence goods has also been curtailed. The scarcityof foreign exchange and the resulting difficultyof importing inputs have squeezed firms. Caughtbetween declining demand, falling prices forfinal goods, and rising costs of essential inputs,Nigerian SPMFs are characteristic of SMEsin Nigeria generally, in experiencing a tightsqueeze on their profit margin’s in recent years(Hambagda, 1987). Infrastructure problems havealso been exacerbated by cutbacks in governmentfinance for basic amenities and public utilities. Inat least two out of the three cases selected fordetailed examination in this study, the problem ofharassment and mistreatment by government offi-cials was mentioned. The harsh effect of SAP haseven extended to make government officials andpersonnel corrupt. Some Police or other govern-ment officials may demand fees as extortionmoney or bribes without any justification fordoing so and there may be little recourse to theauthorities, especially if SMEs are not recognisedas legal. Such attitudes have mainly been attrib-uted to the austere economic environment underthe SAP. Financial constraints therefore, are notonly restricted to small manufacturers alone but toall other sectors as well. The operating environ-ment is therefore made difficult for small manu-facturers under these conditions.

3. Case studies

Comparative case study of Temple ErakoNigeria Ltd., Daniel Obanoh Nigeria Co., &Mandau Int’l. Plastics

Mr. Enuenwosu the proprietor of Temple ErakoNigeria Ltd. is Ibo and comes from south-easternNigeria. The SPMF is located in Jos in Nigeria’scentral plateau, and was established in 1990.Daniel Obanoh Nigeria Co., whose proprietor isMr Daniel Obanoh, is a Bendelite from mid-western Nigeria and is located in Lagos. Thecompany was established a year earlier in 1989.The third firm Mandau Plastics whose ownerAlhaji Manu Dauda is Kanuri was established in1985, and is located in Maiduguri his home statecapital in the north-east of Nigeria.

Overview of Temple Erako Nigeria Ltd. Jos(north-central)

Mr. Anthony Enuenwosu is the sole proprietor ofthe Temple Erako SPMF and its manager as well.His firm presents a picture of a small, isolatedbut also quite innovative SPMF. In 1990, Mr.Enuenwosu established his company employing 9workers. Before managing to do this, he had livedin one room, and claimed to have lived on beansand rice for a full year, starting his work with onlya spanner and sometimes only N120: 00 (£1:00)or ($1:00) cash on him. The only assistance hereceived was from his sister, who sometimeshelped him out. Since he could not afford to buyany machinery in order to manufacture plasticproducts, Mr. Enuenwosu decided to build his ownmachines, and did this by recycling scrappedmachines and using the parts to construct grindersthat could recycle plastic waste as a cheap rawmaterials for other SPMFs to buy. This was howTemple Erako started business; providing recycledscrap plastic as input for other plastic manufac-turers. The firm now has its own machines, againmade by Mr. Enuenwosu, which are capable ofproducing a variety of plastic wares.

Mr Enuenwosu has a Bachelor’s degree inEconomics. In the words of Longenecker et al., hewould be regarded as an opportunistic entrepre-neur. An opportunistic entrepreneur is onewho has supplemented his or her technical edu-cation by studying such non-technical subjects aseconomics, law, or English (Longenecker et al.,2000). Mr. Enuenwosu’s strongly stated preferencewas to be self-employed and independent.

He wants to be in charge of his destiny ratherbe dependent on an employer in business, thepublic sector or in the civil service, portrayinghimself as a sort of “societal or corporate entre-preneurial refugee” or cast-off (Longenecker et al.,10–11; Zimmerer Scarborough, 2000; Bygrave,1997). He saw public employment as full ofbureaucracy, red tape, lobbying and corruption,and hoped to be able to fully exploit his owncreative skills in creating his own firm. Thissignifies his strong desire for responsibility, to beindependent and take the (entrepreneurial) risk ofworking alone (Kuratko et al., 1998; Zimmererand Scarborough, 2000). Mr Enuenwosu’s interestin plastic manufacturing started when he worked



TABLE IIISome key characteristics of Temple Erako SPMF

Characteristics of the entrepreneur

LOCATION: Jos

01. Form of business set-up: Launched as a new venture.02. Nature of ownership: Sole proprietorship.03. Type of organisation: Informal/Promotion/(attractive)/Craft-survival (artisan).04. Reasons for motivation: A need to be independent and interest in manufacturing. 05. Educational qualifications: Bachelors degree in Economics.06. Source of influence: Admiration of former employer and boss and support from sister. 07. Family background: Educated, traditional, rich, large, extended, religious (strict christians), as well as business oriented.08. Religion: Christian.09. Nationality: Nigerian.10. Previous job experiences: Accounting officer.

Characteristics of business setbacks (INTERNAL)

01. Responsibilities to society and attitudes of giving gifts, favors and donations takes away some time and money.02. Finance: Lack of adequate information to sources and access to working capital.03. Personnel: Workers bad attitude and behavior, unreliability, insufficient skills and know-how.04. Products/Production: Lack of standard moulds and central research facilities for experiments and tests.05. Organizational skills: Is poor due to too much work and no one is well qualified or experienced to help take over.06. Premises: Handicapped by infrastructures like constant water and electricity supplies. 07. Planning: Informal, lack of business or strategic plan or the ability to follow especially by workers.

Characteristics of business setbacks (EXTERNAL)

01. Indigenous large firms: They want SPMFs out of business. They are domineering in competing for funds, raw materialsand machine supplies. They are also un-helpful and unwilling to co-operate with SPMFs for advice or offer any type ofassistance.

02. Social environment: People are lazy and unserious. They would not take up challenging jobs such as this one.03. Inputs: Inadequate raw materials and spare parts.04. Infrastructures: Insufficient electricity and water supplies and bad telecommunication facilities.05. Availability of information and opportunities awareness: There is absence of such e.g. on export market opportunities.

Strategies adopted

01. Market research.02. Training and re-training: Done by self on the job to save operating costs.03. Research and development: Experiment with inventing and building machines, and ‘benchmarking’ by visits to other com-

panies that have up to date machines, then try to improvise them.04. Sub-contracting: Other companies order for some of the recycled raw materials, which we produce. 05. Invent niche: By building machines and making unique moulds that can not be copied. 06. Novel production: Occasional changes in color, size or other creative designs.

Characteristics of capital and growth

01. Initial source: Saving from previous occupations and sister’s help.02. Current sources: Mostly Self-generated through reinvestment and a small bank loan.03. Government assistance: None.04. Growth level: Stagnant/Fluctuating.05. Responsible factors: Lack of enough funds and inputs.

Crucial requirements

Funds, adequate infrastructure and personnel with skills and know-how.

Source: Survey material collected January 1994.

briefly for a medium sized plastic company inKano, whose name he withheld.

Enuenwosu felt that his decision had little to dowith family background or childhood influences,but much more to do with (a role model) his admi-ration for the drive and ability of the SPMF-ownerhe had worked for in Kano. To him this was achallenging example of what was possible withcreativity and determination. According to MrEneunwosu, this was the first time he had encoun-tered such an attitude from a Nigerian busi-nessman, and it became an inspiration to him. Hehad other useful work experience, includingworking briefly for an electronics company as anaccountant. A similar background as Enuenwosu’shas been reported on two entrepreneurs who own“Lasa Tech” a very successful high-tech firm inAustralia (Warren et al., 2000). The entrepreneursof Lasa Tech arrived at their level of successamong other things from their corporate workingexperience, in addition to their personalities andhigh level of expertise as individual managers.

Mr Enuenwosu comes from an educated andquite strict Christian family, where a lot ofemphasis is placed on moral discipline, honestyand protecting the family name from shame. Thefamily is extended, and relatives care for eachothers’ needs wherever possible and this willsimilar to a “collective” type of community settingas Deresky, 2000 had described. Mr Enuenwosu’sfather for instance had a business background,and taught his son a lot about business duringhis lifetime. This agrees with the accounts ofMcClelland (1961) and Longenecker et al. (1991).They noted that early exposure, mastery of skillsand parental influence could have a strong influ-ence on deciding the choice of future professionaland career development of children. Further, MrEnuenwosu claimed that the hope, self-disciplineand moral training he obtained from practising hisChristian faith had been an encouragement to himto launch himself into the plastics business. Hehad taken to heart, perhaps, the biblical readingthat success does not come easy; “thou shalt noteat if thou dost not sow” (The Holy Bible, 2Thessalonians, 3:10). He also believed thathelping other needy people would bring goodwilland blessings to his business and so he practicesthe art of giving in his business transactions.

Fitting the characteristics of the more suc-

cessful SPMFs included in this sample so far, MrEnuenwosu said he was not satisfied with hispresent level of performance. His long-term goalwas to manage and own a modern factory thatwould be innovation-oriented, with up-to-datemachinery and higher productivity. This vision isreflective of the entrepreneur’s ego, which isinvolved in future orientation and the desire forsuccess (Kuratko, 1998). Taking a more con-sciously nationalist approach than other SPMFowners, Mr Enuenwosu said he would seek to sub-stitute for imported plastics in the longer-term.Again, this type of adventurous quality has alsobeen noticed among the innovative qualities ofgrowth performing SME’s in Europe (McMahon,2001). Especially in the UK, such innovators winannual awards given by HRH the Prince of Waleshimself to show support for them.

The main constraint on growth of TempleErako however, which is common to most SMEsin developing countries is the lack of funds(Anderson, 1982; Cook, 2000). Like most otherSMEs in Nigeria, this firm cannot meet most ofthe rigid criteria required for applying for loansfrom commercial banks. Other problems includethe lack of skilled personnel, especially those thatcan help in building and maintaining machines,and also the difficulty in obtaining good qualitymoulds of suitable design. These problems are rifeto small manufacturing firms in most developingcountries (Cook, 2000). Unusually, in the case ofthis firm, the problem of competition from largeindigenous firms was mentioned. Such firms wereseen as failing to cooperate with smaller plasticmanufacturers in order to extend to them thebenefits of their steady raw material supplies andbetter machinery. Schmitz (1982) found similarconditions with large firms in other developingcountries as impeding the growth of small manu-facturing sector firms.

All the problems faced by his firm were com-pounded by the political instability in Nigeria,which according to Mr Enuenwosu had already ledto people fleeing the country or returning to theirrespective home regions within Nigeria. Banksand businesses were closed during this period,mainly as a result of the annulled election of Julyto December 1993. Dereskey (2000) notes that thepolitical and cultural environments where busi-nesses are situated are important determinants for


the success of establishments. The operatingenvironment is affected by cultural factors, whichinclude traditional norms, work ethics, socialresponsibility, attitudes, and functions of thepeople. The astute manager will therefore need toanalyse the environment and see how he/she couldaccommodate and manage those forces to theoverall advantage of the business. Indeed MrEnuenwosu saw the cultural environment wherehe operates as an obstacle to his business espe-cially from the personnel perspective.

This is because he felt that the people wherehis business is located have some cultural beliefsthat encourage reluctance towards work. Localemployees are mainly contented with the littlewages they make. This seemed to be a case ofsomeone (Mr Enuenwosu) complaining about thelocal employees lack of an interest in workingharder to earn additional money income. Therewas a tendency to prefer profit from commercialactivity, and hard work itself was not regarded asa virtue, unlike with Mr Enuenwosu, who certainlyhas internalised the values of the “Protestant workethic”. Making money from trading is seen aseasier than making money from production, andfew employees remain with the company long-term. Mr Enuenwosu complained that once theyhad acquired enough money to feed themselvesand their families for some time, workers some-times left to spend the rest of their income indrinking local brew and enjoying other forms ofentertainment, which in his view appeared a wasteof time and money. They only come back after awhile when they were broke again.

One possible problem in Temple Erako’s per-sonnel relations may be that the local who workthere do not accept being subordinate, seeing itas culturally humiliating. The general tendencymay be to see a venture like an SPMF as a meansof survival and earning a living, rather thansomething that might require sacrifice and longhours. These outlooks may help explain why MrEnuenwosu is the only Southern Nigerian SPMFmanufacturer located in that part of the country.

For the owner of Temple Erako, however, thelocation was not seen as a constraint; on thecontrary, he chose to locate his own company inJos because he would be the only SPMF there andbecause it was cheaper and more peaceful to livein Jos than in many parts of the country.

Besides, the central location of Jos in Nigeriahelps in transport to other parts of the country.A number of problems were also mentioned,including the usual ones such as the need forimproved water, electricity, telephones, betterroads and more reliable sources of inputs such asspare parts and raw materials. The problems werenot particular to this firm, but were generallynoted in most cases in Nigeria, the rest of Africanand other countries in developing world (Cook,2001).

Since Temple Erako cannot afford new spareparts, improvised, second hand and recycled spareparts are used. The plastic raw material used ismostly recycled which he recycles himself, andthis avoids the cost of purchasing fresh rawmaterial from other manufacturers. Asked whetherthe SAP policy imposed a harsh set of constraintson his business, the owner of Temple Erako saidon balance it did not.

He in fact welcomes most policy measurescomposing SAP, seeing them as challenging entre-preneurs in Nigeria to bring out their latentcreative abilities. He in fact uses a militarymetaphor of the “survival of the fittest” in whichSPMFs and other small enterprises are forced tofight to survive or simply perish.

Mr Enuenwosu has been able to devise variousstrategies in order to overcome the main con-straints he identified as facing his business.He built his own machinery and so saved thesubstantial cost of buying new equipment. TempleErako sell most of their products through stall-holders in the local markets. Mr Enuenwosugoes to the market place regularly himself inorder to assess how his products are doing inrelation to those of competitors by benchmarking(Lussier, 2000). He also talks to customersabout what they would want or expect in termsof plastic products, and then proceeds to alterthe size, design and colour of his products accord-ingly (Allen, 1999). Informants are also used whokeep the manager of Temple Erako constantlyinformed about changes in consumer taste inthe market place, and about competitors’ latestmoves (Ibid.). In order to ensure that they areaware of what is expected of them in the firm,the owner/manager insists on training all theemployees himself. In addition, visits to largerfirms are sometimes arranged in order to obtain


ideas about the latest machinery, materials andtechnical operation.

Because of his technical competence and hisability to improvise, other firms in Jos and nearbycities like Kano, Bauchi and Kaduna, both largeand small (in the plastics, textiles, beverage andprinting industries) approach Mr Enuenwosu,usually asking him to sell recycled plastic rawmaterials which he stocks or repair brokenmachinery. Since he is able to do these sub-contracting tasks quickly, this is quite an easy wayfor him of earning some additional money. Mostof Mr Enuenwosu’s starting capital was self-generated from previous jobs, and roughly 60–70per cent of profits are reinvested back into thebusiness. He gives the rest to charity (like theChurch other Christian ministries, like leprosar-iums, orphanages, or schools for the blind and thedeaf). This practice could be taken as some formof ethical social responsibility in another ownway, giving a good image to the business (Ferrellet al., 2000; Allen, 1999).

Mr Enuenwosu maintains a very frugal and par-simonious living. Mr Eneunwosu is currentlysingle. Perhaps it is this lack of added responsi-bility that allows him the chance to give out someof his money, although he had clearly explainedthat he does so in observation to his religiouspractices.

According to him his interest is not only tomake money from the undertaking, a qualitywhich has been noticed among the common char-acteristics of avid entrepreneurs (See: Zimmererand Scarborough, 2000). Bygrave (1997) explainsthat getting rich is not the primary motivator ofentrepreneurs. Money is more of a measure ofsuccess. They assume that if they are successfulthey will be rewarded. In addition, Enuenwosuexpresses the desire to fulfil his interest in themanufacturing business and help as many peopleas he can, as a part of his religious obligations.The utilitarian ethic view, which is intended tomeet the general good of most people, would befitting of this example (Ferrell et al., 2000; Allen,1999). Mr Enuenwosu has approached a numberof banks, which denied him funding, since hecould not meet the collateral requirements. Thisconfirms Cook (2000) and McMahon’s (2001)findings about the major impediments that hinderssmall manufacturing firms’ growth in developing

countries compared to the western industrialisedcountries who have easier access to funding. Mr.Enuenwosu did obtain a very small loan from onebank, which considered his SPMF a high-riskbusiness. The advantage of this situation, as hesees it, is that he continues to remain relativelyindependent, and is not in debt.

The manager of Temple Erako is generallyvery optimistic that the firm will meet growthobjectives set at being a large plastic industry inthe future. Bygrave (1997) again interprets thisquality existing in entrepreneurs as the “Dream”.Entrepreneurs have a vision of what the futurecould be like for them and their business and moreimportant, they have the ability to implement theirdreams.

Overall, this SPMF presents the picture ofa tightly run, well-managed business that wasable to overcome quite severe capital, technicaland labour constraints through creativity andinnovation. Furthermore, the exploitation of theowner/manager’s quite marked determination andhis entrepreneurial acumen is an added advantagethat continues to sustain the venture (See: Kuratko,1998).

Overview of Daniel Obanoh Nigeria Co. Ltd.Lagos (south-west)

Similar to the case of Temple Erako is DanielObanoh Nigeria Company, based in Lagos. Mr.Obanoh can be described as an equally deter-mined, hardworking and confident plastics manu-facturer similar to Mr. Enuenwosu (Zimmerer andScarborough, 2000; Kuratko, 1998). Mr. Obanohwas introduced to the researcher at the premisesof Funmi Otaineke & Sons another SPMF duringthe period of fieldwork.

Mr. Obanoh is from a Christian background,and his family is small and relatively poor, butquite well educated and oriented towards business.Virtually each member of his family are involvedin some type of business activity, and they adviseeach other from time to time. Apart from hisadmirable entrepreneurial ability, Obanoh haswide knowledge about the plastics business, whichis of a helpful advantage to him (Longeneckeret al., 2000). Mr. Obanoh had many potentiallysound business ideas about manufacturing ingeneral but as Anderson (1982) earlier mentioned


is facing the same problem for most developingcountry entrepreneurs, in form of lack of capitalto implement his ideas.

In 1992, Daniel Obanoh Ltd. owned two plasticmoulds; two years later by 1994, it owned aroundfour times as many, a sign of growth.

Mr. Obanoh’s strategy was to pay to use hisown moulds in machinery owned by others andthat was what he was doing in Funmi Otenaike’spremises when the researcher met him.

That way the firm was able to keep costs down.Network activities such as this are quite commoninternationally and have been known to be veryhelpful in sustaining small firms remain inbusiness (Bygrave, 1997).

This use of machinery was paid hourly, orthrough a sharing-out of the profit on resultingsales. By 1994 when the main survey was con-ducted, Daniel had added to his range of productsbut still could not afford his own machinery. Hedid report high demand for his products becauseof their generally high quality. In fact, his mainconstraint was lack of capital to invest inmachinery. This meant that there were times whenhe could not meet the high demands due to theunfortunate handicap of not having his ownmachines (Anderson, 1982; Schmitz, 1982; Cook,2000). Lack of funding according to Cook,McMahon and Anderson, is the most serious ofconstraints hindering growth of manufacturingfirms especially in developing economies.

Like the previous respondent, Mr Obanoh isan entrepreneur of the “self-made” type. Helives frugally, is innovative in his methods ofworking, works long hours, and seeks to saveresources wherever possible (See: Bygrave,1997; Stevenson et al., 1999; Zimmerer andScarborough, 2000). The main sources ofcapital for initial investment in this firm wasfrom personal savings from previous work, andmost profits generated are reinvested into thebusiness.

Mr Obanoh requires part payment from his cus-tomers in advance of carrying out work for them,and this assists him with cash flow and revenueraising for inputs. He had never bothered to applyfor a loan from any bank or government institu-tion, reasoning that since he lacked any connec-tions with any high-placed officials, he would bewasting his time in doing so. Oshagbemi (1983)

observed factually that without contacts in thebanking or government systems, it would bedifficult for entrepreneurs to receive attentionor acquire loans in Nigeria. Favouritism andnepotism by officials have taken over the impor-tance of conforming to ideal standards. Highinterest rates on loans, also discourages entrepre-neurs including Obanoh from applying. MrObanoh regrets that the government has not paidattention that is more serious to SPMF and to theentire SME sector, and has ignored its potentialcontribution to the industrial development ofNigeria’s economy.

One attempt to borrow money from familymembers and friends in order to buy a machinedid not work out since Mr Obanoh could give noguarantee that he could repay even this “soft” (i.e.interest-free) loan in good time. It is interestingthat neither of the SPMFs in this case study so fargot into debt. This has been caused more by neces-sity than by choice. The situation has been turnedinto a virtue by both of them, however, and hasbrought them to the same conclusion: that invest-ments in new machinery and equipment wouldhave to come out of existing capital resources gen-erated within the firm rather than from credit froman external source.

Mr Obanoh saw his lack of influential connec-tions with people who might help him as a seriousobstacle to further growth however. He wouldhave liked to secure a substantial bank loanor government grant of some kind, to enable himto buy his own machines. Rigidity of collateralconditions as well as corruption both servedto exclude small SPMFs like Temple Erakoand Daniel Obanoh Ltd just like, Cook (2000)observed to be common in other developingcountries.

Yet, both these SPMFs display many of thequalities usually seen as central to successfulentrepreneurial activity. A high rate of reinvest-ment, innovation, and a tendency to live frugallyare seen as vital by Weber (1930), Schumpeter(1934), Duesenberry (1949), Kuratko (1989),Bygrave (1997), Zimmerer and Scarborough(2000).

Ironically perhaps, Mr Obanoh doubles as aconsultant to other SPMFs, who call him in to dealwith the nitty-gritty of their businesses, includingmatters of marketing and machinery. As in the


case of Mr Enuenwosu, Mr Obanoh felt his choiceof career had very little to do with his upbringing.He left his previous job as a maintenance techni-cian in a textile and printing company on seeinghow lucrative the SPMF sector could be. Self-employment appeared attractive (Longeneckeret al., 1999; Bygrave, 1997; Zimmerer andScarborough, 2000) to him in part because a close

friend had been doing well in the plastics businessat that time.

Mr Obanoh also felt that his religious outlookcontributed to his business success since he washonest, hardworking and self-disciplined, living afrugal lifestyle and avoiding reckless expenditure(Weber, 1930). His responsibilities towards poorerfamily members have reduced the amount of time


TABLE IVShowing some key characteristics of Daniel Obanoh Co. Ltd


LOCATION: Lagos

01. Form of business set-up: Launched a new venture.02. Nature of ownership: Sole proprietorship/owns his own premises.03. Type of organization: Balance of informal/craft to promotion (attractive).04. Reasons for motivation: It is a lucrative business.05. Educational qualifications: Advanced – levels (post high school diploma).06. Source of influence: A friend who was doing well in the business encouraged and challenged him to do the same.07. Family background: Educated, poor, small but business oriented.08. Religion: Christianity.09. Nationality: Nigerian.10. Previous job experiences: Textile company and printing press maintenance technician.


01. Responsibilities to family: Helping and supporting other family members needs reduces amount of money to be re-invested.02. Finance: Lack of information to sources and access to working capital.03. Marketing: Maintaining/increasing market share due to incapacity.04. Planning: Informal and spontaneous as required, does not follow any business plans.


01. Economic environment: Devaluation of Naira and SAP policies.02. Infrastructures: Inadequate electricity and water supplies, bad roads and poor telecommunications facilities.03. Government officials: Frequent harassment by the Police.

Characteristics of strategies adopted to overcome internal/external setbacks

01. Market research.02. Research and development: Comparing imported products and inputs as a standard for production.03. Sub-contracting: Companies and people place orders for products to be manufactured.04. Exports: Customers arrive from neighboring countries to buy his products.05. Invent niches: Availability of a special mould for chrome bed and chair tops and caps.


01. Initial sources: Savings from previous occupations.02. Current sources: Self generated by reinvestment and advanced payment from customers.03. Government assistances: None.04. Growth level: Steady.05. Responsible factors for steady growth: Exports, market research and niche.


Machines and adequate infrastructure like electricity, water supply and communication facilities.

Source: Survey material collected January 1994.

and money he could invest back into the business(See: Bygrave, 1997), but this is not a seriousconcern for him. His main problem as he sees ithas been in trying to secure sufficient funds to beable to buy his own machinery so that he canincrease sales and perhaps capture a larger marketshare.

Inadequate electricity, water supply shortage,bad roads, poor telephones, and other communi-cations are mentioned as problems, as usual.Nonetheless, on the positive side, the firm’spremises are well located near a main road, andare very accessible to most customers. Thelocation advantage has often been attributed to thesuccess factor of most businesses (Bangs et al.,1999; Megginson, 2000; Siropolis, 1997). Alsonearby are a number of machine owners (SPMFfirms like Funmi Otaineke and Mufbat Plastics),to whom Mr Obanoh goes to rent machineryneeded to produce plastic goods from moulds.

As earlier mentioned, the economic environ-ment under SAP has reduced purchasing power,and thus undercut demand from customers (Lall,1995; Hambagda, 1987). Devaluation of thenational currency and resulting foreign exchangescarcity has made it even more difficult thanbefore for Mr Obanoh to obtain the machinery heneeds. Unfortunately, Mr Obanoh seems vulner-able to abuse in several ways. Because hisbusiness so desperately needs its own machinery,he has sometimes been deceived into partingwith money on the promise of being providedwith a machine in a good state of repair. Unableto trust anyone, he has decided that he will haveto raise money himself to buy his own machinery.Harassment from government officials wasanother problem; because the business was unreg-istered and informal, he claimed, the police hadasked him for bribes in the past, threatening toreport him for not being formally registered. Thisis considered as a wider problem for other SPMFsas well in the sample interviewed, since some ofthem are also not registered and are paying a feeto inspectors to protect them from being reportedto the authorities for legal action.

In the face of such severe external constraints,Mr Obanoh’s strategy has been to capture moreconsumer demand for his products by designingmoulds that manufacture standard products of highquality. He also works by himself except when it

is absolutely necessary to save costs of having topay an employee on fixed salary. Like the ownerof Temple Erako, Mr Obanoh uses recycled ratherthan fresh raw materials in order to save on pro-duction costs. He uses customers in order to checkon mould designs, and on the prices and qualityof the products of competing firms, or simply askshis customers directly why they buy his productsrather than others. Imported products are widelyassumed to be of superior quality to Nigerian-made goods, and Mr. Obanoh refers to suchimports by benchmarking (Lussier, 2000), whensetting the standard for plastic products producedby his own firm. A reputation for good qualityproducts has attracted customers from neigh-bouring countries, including Niger, Chad, Benin,Cameroon and Ghana to Daniel Obanoh and tofew other SPMFs. This helps Obanoh to get someforeign money especially (in franc), which has ahigher value from the francophone countries.

Another of Mr Obanoh’s strategies to secure hisfirm’s survival and profitability was to carve aniche by producing unusual moulds that noother small manufacturers have or that wouldinterest other large producers. Niche ventures haveproved to hold greater financial promise for newentrants (Stevenson et al., 1999). SometimesNiche ventures also, require less capital and canachieve financial self sufficiency faster (ibid.). Forexample, Obanoh is the only manufacturer (InLagos) who can produce caps for chrome chairsand beds from a mould. Various companiesdirectly subcontract to him for this reason. Thathe has managed to monopolise the local marketin these products has greatly assisted his growthperformance. Another positive factor for MrObanoh was he did feel that the government’s banon imported plastics had encouraged him toproduce some of the banned products, includingbottle covers and furniture caps.

This overview of Daniel Obanoh Ltd. suggeststhat quality of plastic products may be a constrainton the growth and development of number ofSPMFs, and especially on their capacity to exporttheir products. Since exports to neighbouringcountries, unlike sales in Nigeria, will have tocompete with imports, only plastic products ofcomparable quality to imported products are likelyto be able to compete. Nevertheless, subcon-tracting, niche creation, exporting, networking,


benchmarking, location, re-investment of profitswere among the different methods Daniel used tosustain his business to the level it has achievedwithout external support. Obanoh as Schumpeterwould describe him, is creatively destructive. Hewas able to apply a number of innovative quali-ties in the market, in product development andprocess to keep his business going amidst the dif-ficult operating conditions within which he findshimself (See: Stevenson, 1999; Clemence, 2000;Bygrave, 1997).

Overview of Mandau Plastics Maiduguri (north-east)

The president of Mandau Plastics Manufacturingis Alhaji Manu Dauda, who is also Chairman ofthe Borno State chapter of National Associationof Small Scale Industries (NASSI).

Mandau Plastics has found a secure marketniche in a predominantly Muslim area of Nigeria,as it is the only prayer mat manufacturing companyin Borno State. This SPMF is large and well con-nected, given the influential position of its owner.

In addition, there is virtually no competitionfrom within its area of operation. This securityseems to have brought steady growth in the firm’ssales and profits. However, there has been atendency for both to stagnate. This is a seemingcontradiction, which this overview will seek toaccount for.

Mandau Plastics was launched in 1985, withAlhaji Manu Dauda as sole proprietor. He was atthat time also a member in the local chapter ofthe NASSI before gaining his influential positionthree years later. The owner has a comparativelylow level of formal education compared with mostowners of SPMFs, having only a primary schoolcertificate. Alhaji Dauda’s interest in makingthings confirming accounts of McClelland (1961)and Longenecker et al. (1999) started from hischildhood days, when he made shopping bagsfrom corn leaves and paper and sometimes soldthem. His family are poor and involved in trading.They are also committed Muslims. Alhaji Dauda’smotivation for entering manufacturing was thedesire to become an employer himself (See:Bygrave, 1997). Plastics manufacturing was alsoone of the most affordable lines of business, ashe said. Friends encouraged his interest in the

plastics sector in particular by convincing him thatmat manufacturing would be simple and therewas a high unmet demand for Moslem prayer matsin the region as a whole. This advice provedto be well founded as most researchers notedopportunities that influence business formationand growth (Bygrave, 1997; Ryan et al., 1999;Zimmerer and Scarborough, 1996; Cook, 2000;McMahon, 2001).

Like his Christian counterparts, Mr Daudabelieves that his religious background and viewshave been of great assistance to him in business.In particular, he attributes to his faith his beliefin the need to be honest and respectful towardseveryone. Although responsibilities to his familydo reduce his firm’s income (See: Bygrave, 1997),Alhaji Dauda tries to keep such expenditureswithin limits, and does not see these obligationsas a serious problem. The main problems voicedwere a shortage of working capital, and thehigh rate of staff turnover, as people leave forbetter-paying jobs. Cook (2000) observed howlarge industries draw technical staff away fromsmall firms by attracting them with better payand benefits in developing countries. Importingmoulds for production had also proved to be atime-consuming problem for Mandau plastics.

Although competition is not fierce for AlhajiDauda, he uses several strategies to increase hissales, including market research. He collectsinformation by going to the market and askingcustomers what they appreciate about his productsand what changes they would like to see. He alsochanges the designs and patterns of his productsregularly and pays close attention to responsesfrom customers. Entrepreneurs need to understandthat maintaining good customer relationshipsaccording to Allen (1999) has profitable benefitsfor businesses. One of the “P’s” of marketing(product, place, price and promotion) accordingto Allen, should be people who are customers.Endorsing Allen’s statement, Alhaji Daudareported that these two methods alone had beenvery useful in maintaining and increasing sales.That this is so is evident from Table VII in the nextsection of this paper. Alhaji Dauda was also theonly entrepreneur in the sample who was able, orwilling, to provide professional in-plant trainingfor his employees. This was provided through theIndustrial Training Fund (ITF). The Industrial



TABLE VSome key characteristics of Mandau Plastics


LOCATION: Maiduguri, Borno State

01. Form of business set-up: Launched as a new venture.02. Nature of ownership: Sole proprietorship/Owns Premises.03. Type of organisation: Formal/Promotion (attractive)/Administration (high potential).04. Reasons for going into business: Interest in manufacturing by doing and making things. It is the most affordable line of

business known to him and he wants to build a business empire of his own.05. Educational qualifications: Primary education.06. Source of influence: Friends advice and information that the business is simple and has high demand. Childhood upbringing

and background. Learnt from father who was a businessman.07. Family background: Poor, strict and religious and business oriented.08. Religion: Islam.09. Nationality: Nigerian.10. Previous job experiences: General trade merchant.


01. Responsibility to family members, obligation to other societal activities and giving gifts and favors especially alms, whichare a religious practice and this, reduces earnings.

02. Finance: Limited means of getting access to working capital.03. Personnel: Poor quality and capacity of workers with limited skills and know-how, Bad attitude and behavior towards work

and being unreliable. There is scarcity of qualified workforce in the area.04. Production/Products: Most moulds for good designs are imported and costly. Lack of ability, awareness, or information on

what to innovate.05. Management: Lack of management skills and inability to afford the employment of professionals.06. Premises: Small for expansion but manageable.07. Location: The area of location is also distant from major cities like Lagos, the commercial entreport or from areas of skilled

workers. One has to travel all the time to acquire needed inputs.08. Planning: Lack skills but has a written plan that is not applied to the business operations.


01. Economic environment: SAP policy has decreased purchasing power and access to foreign exchange.02. Political environment: politicians control even bank loans.03. Inputs: Unstable raw material availability, spare parts and maintenance technicians.04. Infrastructure: Unstable electricity, water, communications and transport facilities, also costly to obtain or maintain.05. Large Indigenous firms: They would not co-operate or assist, while they dominate information and sources of inputs and

funds.06. Government Officials: Custom officers demand bribes and create fake regulations.

Characteristics of strategies adopted to overcome internal/external setbacks

01. Market Research.02. Training and re-training: In plant collaboration with professional consultants (ITF).03. Invent niches: The only producer in the area.04. Novel production: Frequent changing of style, color and design patterns to attract more demand.


01. Initial source: From a bank and previous business.02. Current source: Bank and re-investment.03. Government assistance: Yes, partially.04. Growth level: Stagnant/Fluctuating.05. Responsible factors: Instability of Nigerian economy inhibits planning. Lack of management skills, lack of information to other

opportunities and lack of skilled reliable personnel.


Adequate finance, Good advice and information on what and how to do them and ability to carry out Research and development.

Source: Survey material collected February 1994.

training fund has been set up to provide trainingat subsidised costs to formally registered busi-nesses in Nigeria. Most other SPMFs do not useit perhaps because of their informal status andtherefore do not qualify, or because they see noneed for it to save on time and costs.

Just as many other SPMFs studied, MandauPlastics recycles plastic products to save costs.Perhaps surprisingly, given the successful increasein sales, Alhaji Dauda did not envisage exportinghis products. In part this may be because he isbroadly satisfied with his present market position.It may also be because formal export proceduresare very cumbersome and informal procedures areillegal. However, this does not mean that he doesnot export or want to, but perhaps felt this was asensitive information especially for a responsibleNASSI president. Mandau Plastics is well situatedfor access to local markets. However, the locationin Maiduguri has its price; in order to collectimported inputs, for example, a two thousand-kilo-metre round-trip is needed to Lagos. This can takeseveral days.

Unlike most of the entrepreneurs studied so far,Alhaji Mandau Dauda has well-established con-nections with well-placed people able to assist himin securing financial resources. He has been ableto secure a reasonably sized loan from a bank (hedid not specify which one or the date of loan)which enabled him to increase sales/output/work-force. From his experience as state Chairman ofNASSI, Alhaji Dauda added that obtaining bankor government support is not easy or alwaysreliable for most SMEs in Nigeria and so hedepends on retained earnings and re-investment toboost his company growth. It may be that thevery success of Mandau Plastics in carving out asecure niche in terms of the market for its finalproduct tends to stifle entrepreneurial innovation.According to Stevenson et al. (1999), Niche start-ups sometimes could fail because the cost ofserving a specialised niche exceeds the benefitsto customers. Entrepreneurs are advised to analysecarefully the incremental costs of serving a niche,taking into consideration their lack of scale andthe difficulty in marketing to a small-diffusedsegment (Allen, 1999). Excess local demand forthe main products made by this firm however,creates a seller’s market, reducing any incentivesthere might otherwise have been to diversify,

to create new market niches, or adapt new tech-niques and technologies through innovation asSchumpeter described it (Stevenson et al., 1999;Bygrave, 1997; Timmons, 1994).

It seems if anything that Mandau plastic is moresuccessful than the other two industries in the casestudies. Mandau has achieved more consistent“increases” in all categories than the other twofirms have, although it has been realising somestagnant positions in its later years.

It does seem that in the case of this firm, oneof the enhancing factors for its growth and devel-opment may well be the absence of competition,which in this case acts as a disincentive to effortand reinvestment. However, without the opportu-nities available to Mandau unlike Temple Erakoand Obanoh, no one can predict how it would haveperformed. This is because the examples of entre-preneurial determination and acumen in the firsttwo cases has not been manifested in Mandau,simply because there was no much challenge anda need to fight for survival given the opportuni-ties of assistance and support acquired. Thisagain gives an example of how those with entre-preneurial talents like Mr. Obanoh and Mr.Eneunwosu if assisted like Alhaji Dauda, couldhave achieved much greater success in theirbusinesses. Denying support and assistance topromising SMEs can therefore be a way of dis-couraging them from contributing fruitful results,as they should have done to the economy.

4. Case study comparison: Temple Erako, Daniel Obanoh Ltd. and Mandau Plastics compared

Two of the firms surveyed in this research, DanielObanoh and Temple Erako closely approximatethe ideal type of the Schumpeterian firm, managedby entrepreneurial individuals involved in constantinnovation and improvement of production, aswell as undertaking high level of reinvestment(See: Bygrave, 1997; Stevenson et al., 1999;Timmons, 1999). Whilst the capital constraint isclearly tight for these SPMFs, processes of accu-mulation were taking place based on various formsof specialisation and innovation. Both TempleErako and Daniel Obanoh for instance undertakesub-contracting or repair work for others, andproduce, their own working machines from old


parts. It could be said that with such strategies,recycling has been made into an art of efficientsmall enterprise management. The comparisonbetween the three firms in this case study is clearfrom the Tables VI–VIII below.

Tables VI and VII depict the informal natureof the SPMFs and fall within the “craft”/artisan or“marginal”, type of organisation category of Filleyand Adalg (1978). Neither is well connected toofficial or other sources of credit, and neither has


TABLE VIGrowth and performance measurement of Temple Erako Plastic Company

Year Employment Sales as a Production Assets Profits percentage Space (number of full- percentage of (thousand) (machines) (thousand/naira) (increased)time employees) production

1990 03 050 02 2 00 Same1991 16 150 15 3 90

″1992 16 150 08 4 Down ″1993 10 200 14 5 25 ″1994 20 – – 6 – ″Comments Increase Increase Increase Increase Decline Stagnant

TABLE VIIGrowth and performance measurement of Daniel Obanoh Company Nigeria Ltd

Year Employment Sales as a Production Assets Profits percentage Space (number of full- percentage of (thousand) (moulds) (thousand/naira) (increased)time employees) production

1988 2 100 – 1 – Same1989 2 100 – 1 05 ″1990 2 100 – 3 10 ″1991 2 100 – 4 15 ″1992 2 100 – 4 18 ″1993 2 100 – 7 20 ″1994 2 100 – – 18 More spaceComments Stagnant Increase Not available Increase Stagnant Increase

TABLE VIIIGrowth and performance measurement of Mandau Plastics Company

Year Employment Sales as a Production Assets Profits percentage Space (number of full- percentage of (thousand) (machines) (thousand/naira) (increased)time employees) production

1985 35 60 60 23 15 Same1986 20 15 15 26 02–3 ″1987 15 15 15 26 0″ ″1988 15 15 15 26 0″ ″1989 15 15 15 26 0″ ″1990 15 15 15 28 05 ″1991 45 60 60 29 07.5 ″1992 50 65 65 30 10 ″1993 50 65 65 32 11 ″1994 50 65 – – – ″Comments Increase/Stagnant Increase/Stagnant Increase/Stagnant Increase Increase Stagnant

been able to receive much capital from families orfriends. Although both firms remain small, espe-cially in terms of employees, they also have char-acteristics of promotion or attractive organisations,and have the potential to become more growth-oriented in future, due to their ability to accumu-late. Of the three, Daniel Obanoh and TempleErako have had especial difficulties in surviving.

Temple Erako still do not have any up to datemachines nor can they afford fresh raw materialsand are limited in standard moulds of high quality.Most of Temple Erako’s materials are improvisedand this takes away time and requires alot of effortto maintain them to be productive. Constantrepairs are needed especially for the improvisedmachines. Although Temple makes some profits,these are not enough to secure any new machinesas well as cover operating costs. They are tena-ciously coping with the adverse situation con-fronting them by growing at a very lethargic pace.Whereas in terms of growth Temple Erakoconforms to the “marginal” or “survival” categorytherefore, in terms of entrepreneurial strategies, itmore closely resembles “promotion” or “attrac-tive” type organisations.

It may be clear that the determination and for-titude of Mr Enuenwosu to succeed impressed theresearcher, and perhaps this has somewhat biasedthe researcher’s conclusions regarding this firm.But the justification for this bias, if it is one, liesin the complex set of strategies adopted, whichshow a high degree of commitment to long-termsurvival and expansion on the part of the entre-preneur (See: Zimmerer and Scarborough, 2000;Kuratko, 1998; Bygrave, 1999).

These firms’ strategies show signs, whichsuggest that they have the potential to movebeyond survival or marginal in future and becomemore growth-oriented. Factors beyond the controlof the owners may currently oblige these two firmsto remain within the category of “craft-survival”or “artisan-marginal”, but they do seem to exhibitqualities of strong entrepreneurial motivation andability. For this reason, there seems a strong casefor arguing that were these firms, and other firmsof this type, to obtain some genuine externalsupport and assistance, they might well be ableto transform themselves quite smoothly intoformal, “promotion” or “attractive” – high growthtype SMEs, as described by (Filley, 1978 and

Longenecker et al., 2000; Timmons, 1999). Thesetwo firms are similar in being largely the work of“self made” entrepreneurs, who started with verylittle capital, and have overcome a lot of obstacles.They also remain highly motivated and are opti-mistic about realising the “dream” or “destiny” oftheir firms’ future prospects for growth and diver-sification (See: Bygrave, 1997; Kuratko, 1998).

Given the severe external constraints oneach of these firms, the fact that they continueto survive at all without capital backing, andwithout machinery in the case of Daniel ObanohLtd., is evidence of their owners’ creative abili-ties, acumen, drive and resourcefulness. MandauPlastics on the other hand, a more formal typeof SME can perhaps be located somewherein between a “promotion” or “attractive” andan “administration” or high-growth type of organ-isation.

It is very close to being of the administrationor high-growth type. Mandau Plastics is mostsecure and successful in usual terms within the“promotion” or “attractive” category.

Unlike the first two entrepreneurs, AlhajiDauda was not a “self-made” man in the usualsense, and did not fit the Schumpeterian archetypeof an entrepreneur. His privileged position aschairman of the state chapter of NASSI makes hima prominent figure in the local community inwhich his business operates. Both the ownersof Temple Erako and Daniel Obanoh Ltd. areisolated, and workers and officials can harass themrelatively speaking. Alhaji Dauda’s strongbusiness connections and privileged position didnot seem to be of any serious advantage to him;in fact in terms of entrepreneurial initiative, MrDauda was no match for the other two managerspresented here.

Inspite of the advantages Mandau has over thefirst two entrepreneurs in being free from compe-tition and getting assistance from formal sectorbanks, the growth of Mandau Plastics wasconstrained, apparently by too secure a marketposition. Whilst insecurity can undermine thefortunes of companies, as Temple Erako andDaniel Obanoh’s cases have shown, innovationcan also be dampened by too much security. Thisis an interesting finding of this case study.

Whereas Alhaji Dauda had no real need toinnovate, stretch his management capability or


exercise his resourcefulness in the running of thebusiness, Temple Erako and Daniel Obanoh Ltd.suffered so much from insecurity and rising costsof inputs etc. that it hampered their efforts toinvest. Whereas in the other cases, there was thedesire for investment and innovation, in the othercase neither was desired. Although DanielObanoh’s firm is very small indeed, he managedto attract orders from the export market. Thiscould have been true, perhaps, of Alhaji Dauda,but he did not suggest any such relationship.Although Daniel Obanoh was seriously con-strained by the lack of a proper machine, he wasable to secure contract-providing parts forlarger companies (chrome furniture manufacturingindustries).

The lack of any competition is howevercommon to both Mandau Plastics and TempleErako as they are the only SPMFs in Maiduguriand Jos and roundabout. Yet only Mandau Plasticshas been able to significantly benefit from itsmonopoly in order to expand sales. The reason forthis may be that Mr Enuenwosu is not a local.Although a Christian in a predominantly Christianarea in Jos, there could still be the problem ofregional difference and he may not appreciate thekinds of goods that might sell more profitably inthat area. This is a speculative explanation, ofcourse, but it may well be part of the picture atleast.

Perhaps the most important implication of thiscomparison is to highlight the price of allocatingsupport, grants, loans and other forms of officialand private-sector support to SMEs purely on thebasis of existing networks. The tendency is tofavour familiar names and faces and larger, moreconventional firms with secure market positions(such as Mandau Plastics). Smaller, but possiblyvery promising, firms are not usually consideredseriously, especially when involved in the manu-facture of some unusual commodities. Thisproblem however, may not be insurmountable asfirms could always localise and create nicheproducts that would be accepted to the area(Dereskey, 2000). The need for a more rationaland resource-efficient allocation of increasinglyscarce credit resources between various SMEs, ishighly vital in Nigeria. Whether any changes willresult is another matter, and would need to beassessed at some time in the future.

The role of entrepreneurship

It can be seen from the foregoing discussions thatindeed entrepreneurship has played a significantrole in determining the level of success realisedby individual SPMFs presented in the case studyprofiles. Although external support is essential inenabling a healthy environment that encouragesbusiness growth, it cannot function efficientlywithout effective entrepreneurial input. Table IXbelow is used to further categorise the trait ofthe entrepreneurs in this study to understandtheir identifying qualities. It shows the differentdefinitions and criteria of one approach to themicro view of entrepreneurship. The micro viewof entrepreneurship examines the factors that arespecific to entrepreneurship and are part of theinternal locus of control (Kuratko and Hodgetts,1998). The potential entrepreneur has the abilityto control, to direct or adjust the outcome of eachmajor influence in this view (ibid.). Table X showshow entrepreneurship has also been characterisedas the interaction of the following skills: innercontrol, planning and goal setting, risk taking,innovation, reality perceptions, use of feedback,decision making, human relations and indepen-dence (Kuratko and Hodgetts, 1998). In addition,many people believe successful entrepreneurs areindividuals who are not afraid to fail (ibid.). Intable 11, the overall characteristics of the entre-preneurs studied and the methods of approach theyadopt are presented to examine their nature ofmake-up and identify what qualities are missing.The intention here is to understand the strengthand weakness of each entrepreneur and firm andto decide which of these factors and qualitiesappear to have contributed most to overall per-formance of selected firms.

From an internal point of view, the approachesadopted by the SPMFs are depicted in relation toexternal factors. A combination of internal quali-ties and external factors is used to determine a par-ticular SPMF strategy. Observing the approachesadopted by various SPMF entrepreneurs is usefulin revealing the type of practices, which appearto be more or less successful in determininggrowth and development of such firms.

Mandau Plastics have shown the most impres-sive result from the case studies presented, as anexample of a SPMF within the “administrative” or


“high-potential”, growth range and with a lot ofintention to grow further. Although Mandau hasless external constraints, it differs in style ofapproach and in terms of opportunities availableto them. The firm is structural in approach in termsof its organisation and does not demonstrate aSchumpeterian method. Whereas Obanoh is moreinnovative and produces a variety of plasticproducts within a more competitive environment,Mandau produces only plastic prayer mats and issituated in a less competitive environment.Although Obanoh and Erako did not have thesame opportunity Mandau had in terms of beingassisted with government funds, yet they usedtheir creative abilities. They developed ways ofcoping with their constraints by raising their ownfunds and developing their own raw materials andmachinery. Their entrepreneurial qualities standout above everything else than for instance the

supporting factors which has assisted Mandausuch as government assistance. Expectationscannot always be predicted with equal accuracybut it appears that with a little bit of assistance asin the case of the first two examples, consideringthe qualities which they have portrayed, TempleErako and Daniel Obanoh SPMFs could haveeasily graduated to a higher category ofSPMFs. They could have graduated from the“survival/marginal or the promotion/attractive”category they are currently to a higher category(See Table I). However, lack of external supportand assistance could have its own advantages aswell. It was under such challenging conditions asMr Enuenwosu of Temple Erako had said thathelped to bring out the best in him. It may not bea general view, but it is possible that the skills andinnovative potentials latent in certain entrepre-neurs will not have been realised under more


TABLE IXDefinitions and criteria of one approach to the micro view

Entrepreneurial Definition Measures Questionsmodel

“Great person” “Extraordinary achievers” Personal principles What principles do you have? Personal histories Experiences What are your achievements?

Psychological Founder control over the Locus of control What are your values?characteristics means of production Tolerance of ambiguity

Need for achievement

Classical People who make Decision making What are your opportunities? innovations bearing risk Abilities to see What is your vision? and uncertainty opportunities creativity“creative destruction” How do you respond?

Management Creating value through the Expertise What are your plans? What are recognition of business Technical knowledge your capabilities? What are youropportunity, the management Technical plans credentials?of risk taking . . . through the communicative and management skills to mobilise

Leadership “Social architect” Attitudes, style How do you manage peoplePromotion and protection Management of peopleof values

Intrapreneurship Those who pull together Decision making How do you change and adoptto promote innovation

Source: Adopted from J. Barton Cunningham and Joe Lischeron, “Defining Entrepreneurship,” Journal of Small BusinessManagement (January 1991): 56.


TABLE XCharacteristics often attributed to entrepreneurs

01. Confidence 22. Responsibility02. Perseverance, determination 23. Foresight03. Energy, diligence 24. Accuracy, thoroughness04. Resourcefulness 25. Cooperativeness05. Ability to take calculated risks 26. Profit orientation06. Dynamism, leadership 27. Ability to learn from mistakes07. Optimism 28. Sense of power08. Need to achieve 29. Pleasant personality09. Versatility, knowledge of product, market machinery, technology 30. Egotism10. Creativity 31. Courage11. Ability to influence others 32. Imagination12. Ability to get along well with others 33. Perceptiveness13. Initiative 34. Toleration of ambiguity14. Flexibility 35. Aggressiveness15. Intelligence 36. Capacity for enjoyment16. Orientation to clear goals 37. Efficacy17. Positive response to challenges 38. Commitment18. Independence 39. Ability to trust workers19. Responsiveness to suggestions and criticism 40. Sensitivity to others20. Time competence and efficiency 41. Honesty, integrity21. Ability to make decisions quickly 42. Maturity, balance

Source: John A. Hornaday, research about Living Entrepreneurs,” in Encyclopaedia of Entrepreneurship, ed. Kent/Sexton/Vesper, 1982 in Kuratko and Hodgetts, 1998.

TABLE XICharacteristics and approaches taken by selected SPMFs

Name of Entrepreneurial Severity of constraints Entrepreneurial Overall growthSPMF approach characteristics performance

Temple Erako Schumpeterian/ High: Machines, and Fortitude/Determination/ ModerateIndividual/Classical Capital/Infrastructure/ Resourcefulness/Initiative/

Raw materials Positive response to challenges/ Independence/Need toachieve/optimism/versatility/Intelligence

D. Obanoh Schumpeterian/ High: Machines and Fortitude/Determination. ModerateIndividual/Classical Capital/Infrastructure Resourcefulness/Initiative/

Positive response to challenges/independence/Need to achieve/optimism/ versatility/foresight

Mandau Structural/ Low: Working capital/ Optimistic/Less Innovative/ GoodPlastics Management/ Inadequate experience, maturity balance/tolerance

Leadership/ education & training for ambiguity/responsibility/Intrapreneurship profit orientation/capacity

for enjoyment/pleasant personality

relaxed conditions such as those of Alhaji Daudaof Mandau Plastics. Perhaps the particular advan-tages in favour of Mandau could explain why hehad better levels of performance overall than theother SPMFs.

The businesses of Temple Erako and DanielObanoh seemed mainly to survive through sheerdetermination and fortitude. These two entrepre-neurs are examples of promising avant-gardeSchumpeterian personalities that it could beargued have been neglected by sources of externalassistance. Schumpeter’s type of entrepreneuraccording to Stevenson et al. Indulges in all kindsof innovation including process innovation, marketinnovation, product innovation, factor innovationand even organisational innovation. The entrepre-neur in Schumpeter’s context is creating andresponding to economic discontinuities. Similarly,Messieurs Enuenwosu and Obanoh maintainedtheir own machinery, trained their own employeeson the job, and closely supervised, monitored andadapted production processes and products inorder to save costs and resources. They were ableto accumulate capital for further investment inaddition. For example, because they could notobtain loans to afford buying fresh raw materials,they often resolve to recycle waste plastics. In theabsence of expensive new imported machinery, theentrepreneurs endeavour to improvise and buildtheir machines and make their own moulds. Tomeet training needs, the entrepreneurs train theirown personnel in-house to save costs of trainingthem in institutes and conduct their own marketresearch in the market place through bench-marking and personal customer contact (Lussier,2000). In addition, because water and powersupply, are erratic and can increase overhead costs,the entrepreneurs dig wells and buy electric gen-erators. Yet, another type of strategy used by theseentrepreneurs is to subcontract work to other lessbusy manufacturers and then split profits after-wards. Sub-contracting deals are usually negoti-ated with other fellow manufacturers whenmachines are broken down, during periods of highworkloads, or when trying to meet with customerorder deadlines. This practice of ingenuity hasbeen observed by Anderson (1982) as a means ofeconomising capital costs adopted by SMEs whohave limited access to financial support or assis-tance. However, the advantage of close supervi-

sion by the entrepreneurs, administrative, produc-tion, sales and marketing activities could be betterintegrated.

5. Conclusion

The three comparative case studies presented therange of views from SPMF interviewees and high-lighted what was already clear from the surveyresults obtained. There are no fixed set of obsta-cles, constraints or a set of positive factors thatcan be said to influence the growth and develop-ment of all small plastic-manufacturing firms inNigeria. On the contrary, while some constraintsare almost universal (poor infrastructure, lack ofexternal credit) (Cook, 2001) even these asSchumpeter explained, can sometimes be turnedto advantage through the resourcefulness anddetermination of particular entrepreneurs. Thethree comparative case studies gave a goodexample of this, since the two firms, whichsuffered from the most severe constraints in termsof credit, were able to accumulate even so. Thisis not what Schatz (1967) was thinking of whenhe referred to the illusion of credit shortage inNigeria, but it may be a new way of interpretingthat term. In the case of comparative case studyon Temple Erako, for instance, the importance ofcontrol appeared to be highlighted, and the diffi-culties of running a firm without external supportseemed to be pointed too. Yet, this was not trueof all the SMPFs surveyed in many cases. Thisstudy has highlighted the difficult situation offinancial capital for small businesses in Nigeria.According to Alhaji Dauda and Mr Enuenwosularger firms sometimes try to force smaller firmsout of business perhaps so that they don’t standin their way for competition in terms of gettingattention for funds and raw materials, or in themarket through selling products in similar linesof production, since the SMEs could have loweroverheads and therefore sell their products cheaperto the poorer segment of society. The larger firmsattempt to block smaller firms by dominatingfinancial markets and buying favours from offi-cials involved in handling official policies at theexpense of the small firms.

In terms of organisational types, SPMFs appearhighly diverse. A few of the larger, quasi-formalsector firms were of the “promotion” or “attrac-


tive” type, but most manifested the qualities ofthe “craft”/“survival” or “margina”/“artisan” typeorganisation. This confinement to a state of virtualsubsistence production can be attributed to awhole range of external and internal factors, whichare difficult to disentangle in practice. After eachfirm was assessed in turn, the comparative casestudies and overviews of individual firms pre-sented in this study made it clear just how complexthe inter-relations between various factors, internaland external, positive and negative, can be inreality. Overall very few of these SPMFs haveobtained any credit from formal-sector institutions(whether public or private). Yet two of the firms,which did not obtain such support, appeared to usto be relatively doing very well, perhaps showingthe most promise of future growth based on inno-vative present survival strategies. Two of theentrepreneurs focused in the study appeared tohave indeed created a “survivalist culture” for sus-taining their business activities in a constrainingbusiness environment.

At times, being in a favourable position toobtain loans and other forms of assistance did notseem to be of a very significant advantage forsome entrepreneurs, since they performed nobetter than firms the less privileged in this respect.Most SPMFs – like many SMEs in Nigeria moregenerally in manufacturing sector especially – aresimply struggling to survive. They would have todepend on their own initiative and determination,as well as the assistance of family and friends apractice commonly found among collectivistcultures (Dereskey, 2000). Discovering ways ofencouraging, correcting or ameliorating specificSPMF growth strategies is one of the goals of thisresearch. The implications of this however is thatthey might have the problem of sustaining thatposition in the long run as a result of the varioustype of external constraints against them, whichaffect even the larger industries as well.

Overall, then, it can be concluded that the mostfrequently mentioned constraints of SPMFs areexternal ones. These include: infrastructure, espe-cially inadequate electric supplies; the effect ofSAP economic policies, especially devaluation,foreign currency restrictions and the decliningpurchasing power of consumers. These externalconstraints make it much more difficult to importupdated equipment and other inputs on time since

these are not produced in the country (Schatz,1963, 1964, 1965, 1968, 1970, 1996). The maininternal constraints were seen to be: inadequateinformation about the market and other opportu-nities, problems of organisational planning andpoor management, shortage of financial capital(e.g. loans and grants), and the widespreadnegative attitudes of personnel towards the work.The views from the SPMF interviewees wereuseful in providing some confirmation from per-sonnel and managers in some of the major insti-tutions in Nigeria, that capital, raw materials,foreign exchange and infrastructure were indeedregarded as among the most serious impedimentsto effective growth in the SME sector, and amongSPMFs in particular. These groups of non-SPMFrespondents also confirmed the problem of thenon-implementation of government policies andthe lack of any low-interest capital specificallyearmarked for manufacturing SMEs like theSPMFs. Inadequate training opportunities wereanother problem exacerbated by the recency ofsuch industrial and scientific processes in theNigerian context.

The important, but variable and often intangiblerole played by family, by peers and by previousprofessional experience was clear from these com-parative case studies.

It is significant for the purposes of this researchthat these observations on the current situation ofNigerian SPMFs echo the major findings of thereview of the existing literature.

The multi-dimensional nature of SMEs must beemphasised, since it means that one single factorcannot always be held responsible for variationsin the growth performances of firms such as theSPMFs, as an example (Orru, 1991; Allen, 1999).The same factors can of course operate very dif-ferently in differing contexts. It is a simple point,but one that can easily be forgotten in the searchfor definitive “sets of factors” to explain SMEgrowth, stagnation and decline.

In Nigeria, as in most situations, various oppor-tunities exist both for expanding the size of suchfirms, and for diversifying their range of activi-ties. The prospects for greater use of subcon-tracting have been mentioned, for example. Bettersubcontracting relationships however, like the oneenacted by law in Japan in 1969 by the Ministryof International Trade and Industry (MITI), could


be instituted to strengthen links between large andsmall firms’ in Nigeria (Aoyama, 1999). Exportingto regional markets could also be a means ofensuring growth of the SPMF sector and of man-ufacturing SMEs as a whole, especially in petro-chemical and related industries (Mambula, 1997).Further expansion of SPMF activities throughimport substitution is also possible, particularly asimports become more and more expensive in realterms, given the devaluation of the local currency.This study has shown that many of these poten-tial niches are yet to be fully exploited. In con-clusion of this paper, it is important to emphasisethat some of these opportunities will have to beembarked on, and a set of proposals will need tobe elaborated which it is expected could enhancethe growth and overall economic contribution ofthe SPMF sub-sector to Nigeria’s economy.

On a final note therefore and from the caseprofile examples presented, it is an acceptable factthat in the paucity, inadequacy, scarcity or evenabsence of resources for production, indeed neces-sity can be seen to be the creator of invention. Inaddition, having a high locus of control is a usefulantidote for overcoming external impediments. Animportant lesson that can be learned from thisstudy is that entrepreneurs wherever they are canbe creative in alleviating constraining factorsthemselves. Entrepreneurs should not alwaysdepend on external support that could be inade-quate or a waste time by “sitting and waiting” foraid that may never surface to aid them.

Although, regional environments can influencebusiness performance in particular areas atimes,the regional and religious backgrounds entrepre-neurs come from should not necessarily determinetheir creative or resourceful capabilities. It israther, the determination and willingness of theentrepreneurs to act that will count or make a dif-ference as explained by Berger and from aSchumpetarian context. These are importantfindings of the study for encouraging entrepre-neurial resourcefulness, innovation and develop-ment.

In as much as there is a more general accep-tance for external support for assisting businessgrowth therefore, it should also be regarded asgoing hand in hand with entrepreneurial effort asa crucial internal requirement. On occasions whereexternal support has been lacking or deficient the

entrepreneurial drive has been able to sustainbusiness growth and should therefore be encour-aged. Classic examples that support this fact canbe seen from the case of Temple Erako and DanielObanoh who had high external constraints butwere able to sustain their business developmentthrough their strong internal entrepreneurial qual-ities. On the other hand it is clear from given datathat Mandau Plastics has a better performancelevel than the former SPMFs in this study. It isalso possible that the limited external constraintsagainst the firm were responsible. However,Mandau did not show any exceptional businessperformance qualities arising from an entrepre-neurial point of view as a sign of internal strengthas did Temple Erako or Daniel Obanoh. Ratherthan just seeing external and internal factors asbeing independent of one or the other for thegrowth and development of SMEs at all times,they should also be viewed as interdependent. Thecritical linkage between internal and externalfactors for SMEs to perform favourably in termsof overall performance, growth and developmentis therefore a necessity. Entrepreneuralism on itsown is never enough nor is external help everenough.

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Relating External Support, Business Growth & Creating Strategies for Survival: A Comparative Case Study Analyses of Small Manufacturing Firms (SMFs) and Entrepreneurs

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