Risk taking, proactiveness and SMEs performance in Kaduna State

Abstract

Small and Medium Enterprises (SMEs) in Kaduna State continue to record poor performance, low sales growth, declining profitability, limited market expansion and high business mortality, despite interventions from the Kaduna State Government, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the Bank of Industry (BOI) and other development partners. This study examined how risk-taking and proactiveness affect SMEs' performance in Kaduna State, Nigeria. The target population, drawn from the SMEDAN (2021) report, comprised 21,615 SMEs in the state. Applying the Taro Yamane formula produced a sample size of 393, which was raised by 30% following Israel's (2013) recommendation to a final sample of 511. Respondents were selected through a multistage sampling technique with proportionate sampling across six local government areas: Chikun, Kaduna North, Sabon Gari, Zaria, Jama'a and Kachia. Of the 511 questionnaires administered, 438 were valid and were analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM). Proactiveness had a significant positive effect on SMEs' performance in Kaduna State, while risk-taking had a significant negative effect. Balancing entrepreneurial initiatives with effective risk management, the study concludes, matters for improving SMEs' long-term performance in Kaduna State. SME owners and managers are therefore advised to strengthen proactive business practices, monitor market trends, anticipate customer needs, pursue innovation, and manage risk through careful evaluation of investments and strategic decisions.