Innovation and Performance of SMEs in Nigeria Manufacturing Firm

The depth of research works on SMEs' performance indicates lack of consensus on the factors that drive SME's performance (Ndeye, Abdul, & Nagayevb, 2018).Estimation from international organizations show that SMEs account for between 80% to 99% of firms in any given country as well as between 60% to 70% of global employment (World Trade Organisation,2016), and approximately 50% of GDP (SME Competitiveness Outlook, 2015) in both formal and informal sectors.SMEs in the manufacturing sector continue to encounter difficult situations, trimming performance, causing inability to remain buoyant, feasible and innovative, thus, choking the sustainability and growth of the firm (Bushe, 2019).These challenges are exacerbated by several inhibiting factors (Mohammed et al., 2017), some of which are attributed to lack of innovation and increasing cost of production which negatively impact on the SMEs performance (Abdisa, 2019).In Nigeria, Akinwale et al. (2017) noted that SMEs dominate the larger proportions of firms in the manufacturing sector.Critical in the development, it remained uncompetitive, characterized by Abstract: Performance of small and medium enterprises (SMEs) in the manufacturing industries all around the world is considered as a major driver of the economic development, specifically; in the areas of industrialization, modernization, and urbanization.However, SMEs in Nigeria manufacturing sector are encountering difficulties that lean their performance.The urge to remain buoyant, feasible, and innovative is often being obstructed by the slow rate of growth of the firm.It is conceived, perhaps, that risk-taking and proactive ability could make a substantial difference in ameliorating the challenges in the sector.Thus, this study examined the individual and combined moderating effect of risk-taking and pro-activeness on the relationship between innovation and performance of SMEs in Nigeria manufacturing firm.The study adopted survey research design of 504 population of owners and managers of 126 SMEs, food and beverages, agroallied and animal feeds, plastic and rubber, and wood furnishing and fitting companies in five Local Government Areas in Ogun State, Nigeria.Total enumeration method was adopted for the study as data were collected through structured adapted and validated questionnaire.Cronbach's Alpha reliability coefficientsfor the dependent variable, the independent variable and the moderators ranged from 0.88 to 0.95.This indicated that the instrument employed had a high level of consistency above the recommended criterion of 0.7.The response rate was 87%.Data were analysed using descriptive and inferential (hierarchical regression) statistics.The findings revealed that pro-activeness had a negative and significant moderating effect on the relationship between innovation and performance of SMEs in the Nigeria manufacturing firm (∆F=10.8990,∆R 2 = 0.002, p<0.05), while Risk-taking had a negative and significant moderating effect on the relationship between innovation and performance of SMEs in the Nigeria manufacturing firm (∆F=37.9739,∆R 2 = 0.009, p<0.05).Meanwhile, the combined effect of pro-activeness and risk-taking had significant moderating effect on the relationship between innovation and performance in the Nigeria manufacturing firm (∆F= 99.210, ∆R 2 = 0.015, p<0.05).This implies that the higher the level of proactiveness and risk taking of the selected SMEs, the higher the firm performance of the Nigeria manufacturing SMEs.The study recommended that owners and managers in manufacturing SMEs in Nigeria should be more proactive and take unflinching steps in their businesses given the competitive environmental context within which they exist.