CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

Today’s business environment is extremely dynamic and experiencing rapid changes as a result of technological improvement, increased awareness and demands of electronic trade concept of globalization. Globalization could be defined in simple terms as the easy access or reach of a certain resource the world over. In this context, globalization is a way of removing trade barriers. Globalization is a phenomenon that no development agenda can afford to ignore. The economic activities are saturated with globalization process and the driving force of his process in small scale business. Small scale businesses are the backbone of the nations and they consist of the largest section of businesses in most economies as well as frequently offer the greatest potential for job creation (Adeleke, 2003). SMEs can be defined based on certain criteria which include, turnover, number of employees, profit, capital employed, market share, asset value and relative size within the industry.

One of the major focuses on small scale businesses is that these enterprises make remarkable contributions to the economies of both developing and developed countries. According to Usman (2001), the development of small and medium enterprises must be seen as an attempt towards the achievement of a wider economic and socio-economic objective, as well as poverty alleviation. The enterprise also drives the country’s development as they create employment and contribute to the gross domestic product (GDP). Small and medium scale enterprises are expected to facilitate the growth and development of human and capital resources towards general economic development and the rural sector in particular. In view of these expected roles from SMEs, the Nigerian Government had in the past devised policies and incentives for the development of small and medium scale enterprises. According to Adewuyi (2011), globalization is the process of opening up of economies to the outside world to aid trade, fall in physical and other barriers to enhance mobility of goods and factors of production as well as labour force. With the removal of barriers to trade, competition has intensified and has presented both opportunity and challenges to domestic firms to innovate and improve their competitive position. The act of small and medium scale enterprises (SMEs) in the post trade liberation era in developing countries has fascinated the attention of scholars, nevertheless, their interest has been on financial, output, export, and marketing performance of firm in Nigeria, SMEs are beset with a countless of challenges on the strength of internet facilities and information technology which are in no small measure affecting their growth, the most distinct is defective infrastructure, in particular electricity and use of obsolete equipment and methods of production because of owner’s inability to access new technology (Adewuyi, 2004). However in most developing economies like Nigeria, ICT lacks the necessary infrastructure to support it. Many studies have been done on globalization relating to small scale businesses especially in developed countries. Surprisingly, reviewed literatures show that many scholars in Nigeria have expressed interest in examining the conceptual issues of globalization as it affects Africa in general and Nigeria in particular. Interestingly, few attempts have been made in empirically relating globalization to small scale business performance. Therefore, there is need to examine the effects of globalization on the performance of small scale businesses in Nigeria in order to fill the gap in knowledge.

1. STATEMENT OF THE PROBLEM

Scholars have conducted researches in the areas of globalization and performance of SMEs in academic world. Elizabeth and James (2006) in the United States of America led to conclusion that all else equal, globalization does not have a significant effect on the profits of white-owned firms but in contrast, the estimated coefficient of all three globalization measures is significant at the 5 percent levels for minority-owned small scale businesses, suggesting that on the average, minorityowned firms that operate in more globalized region earn lower profit. Onyeaghala and Anele (2014) examined the relationship between globalization and small scale businesses performance and suggested that globalization is strongly and positively related to performance of small scale businesses. They found that each dimension (jobs, income or social system) of the small scale businesses performance was positively correlated to globalization. Their finding conform with that of Hitt,et al.,(2001) which state that globalization is the spread of economic innovation around the world and the political and cultural adjustments that accompany this diffusion. Most of the scholars whose works have been reviewed highlighted the challenges of the small and medium scale businesses as high cost of administration of small loans, high interest rate, and discrimination from banks averse to risk of lending to small borrowers. In light of the above statement, the broad objective of this study is thus to examine the effect of globalization on small scale business performance in Taraba State, while the specific objectives are; to ascertain the factors that affect SMEs development in Taraba; examine the trend of trade openness in Taraba State on performance of SMEs development in Taraba State; and to examine the impact of bank credit on the performance of SME’s in Taraba State.

1. AIM AND OBJECTIVES OF THE STUDY

This study is on the relevance of globalization on the performance of small enterprise in Taraba State. The aim is to find out the relationship between the effects of globalization on the performance of small enterprise.

The specific objectives of the study are:

1. To ascertain the factors that affect SMEs development in Taraba.
2. To examine the trend of trade openness in Taraba State on performance of SMEs development in Taraba State.
3. To examine the impact of bank credit on the performance of SME’s in Taraba State.

1. RESEARCH QUESTIONS

The research questions to address in this study are as follows:

1. What are the factors that affect SMEs development in Taraba.
2. What are the trends of trade openness in Taraba State on performance of SMEs development in Taraba State?
3. What are the impacts of bank credit on the performance of SME’s in Taraba State?

1.5 STATEMENT OF HYPOTHESIS

H0 there is no significant relationship between effect of globalization and performance of small enterprise.

1.6 SIGNIFICANCE OF THE STUDY

This research is significant because it provide answers to factors militating against the improvement of advance information technology, trade openness and also proved the success and growth associated with implementation of exportation and importation in the areas of SMEs operations that can be enhanced.

1.7 SCOPE OF THE STUDY

This study laid focus on the relationship that exists between effects of globalization on the performance of small enterprise in Taraba State. It takes consideration of the local farmers and entrepreneurs in the state.

1.8 LIMITATION OF THE STUDY

TIME CONSTRAINTS: One the challenges experienced by the researcher is the issue of time; the research will simultaneously engage in departmental activities like seminars and attendance to lectures. But the researcher was able to meet up with the deadline for the submission of the project.

FINANCIAL CONSTRAINTS: Every research work needs funding; however lack of adequate funds might affect the speed of the researcher in getting materials for completion of the project.

1.9 DEFINITION OF TERMS

Globalization

Globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe.

Small Enterprise

This are privately owned corporations, partnerships, or sole proprietorships that have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to apply for government support and qualify for preferential tax policy varies depending on the country and industry. Small businesses in many countries include service or retail operations such as convenience stores,small grocerystores, bakeries or delicatessens, hairdressers or tradespeople (e.g., carpenters, electricians), restaurants, guest houses, photographers, very small-scale manufacturing, and Internet-related businesses such as web design and computer programming. Some professionals operate as small businesses, such as lawyers, accountants, dentists, and medical doctors (although these professionals can also work for large organizations or companies). Small businesses vary a great deal in terms of size, revenues, and regulatory authorization, both within a country and from country to country. Some small businesses, such as a home accounting business, may only require a business license.

Performance

 Performance generally comprises an event in which a performer, or group of performers, presents one or more works of art to an audience. In instrumental music and drama, a performance is typically described as a "play". Typically, the performers participate in rehearsals beforehand to practice the work.

An effective performance is determined by the achieved skills and competency of the performer, also known as the level of skill and knowledge.