CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Entrepreneurship plays an essential role in the economy’s growth and creates many job opportunities for a country (Atandi, 2021). Entrepreneurial activity is a nation’s long-term economic growth driver and is broadly accepted as the main feature of economic change. Entrepreneurship mainly focuses on converting business concepts into economic prospects. The people who own and operate enterprises are known as entrepreneurs and possess entrepreneurial skills that will contribute to the performance of their businesses. Review of extant literature revealed that the ability of the SMEs to achieve higher performance has been inhibited by lack of skills on the part of the entrepreneurs. Despite all government interventions and supportive mechanisms, SMEs fail to grow from micro to small and small to medium and eventually large enterprise as it will be expected.

Entrepreneurial skills complement an entrepreneur to analyze situations, opportunities, and environment and assist the business manager in managing and assuming a business’s risk and reward. Entrepreneurs have a way of surviving complex problems, unlike the non-entrepreneurs who lack critical entrepreneurial skills (Mwangi, 2020). The enterprise owner will therefore determine an enterprise’s performance. The relationship between a business and the business owner indicates that an entrepreneurial, business-minded owner will grow their business to maturity due to their administrative competencies. The entrepreneurial skills essential for the success of small and medium enterprises include; motivation, financial management skills, human resource management skills, ability to gather resources, communication skills, managerial skills, marketing, and technical skills, among others.

The small and medium enterprises (SME) division has a significant role in the economic development of most countries of the world and notably vital for-profit generation to owners (Ebiringa, 2011). It is, therefore, a known fact that SMEs contribute meaningfully to achieving general economy development. This contribution can bring about a surge of GDP, improvement in the way of living, and reduce the rate of unemployment (Perks and Smith, 2006). As a result of these facts, any economy should maximize the benefit provided by such venture. However, Cameroon has not been able to identify the full importance of this sector despite the country position as the world leader in entrepreneurial spirit (Global Entrepreneurial Monitor, 2012).

The contribution of entrepreneurship and SMEs to the long-term development of an economy is very glaring. For instance, the study according to Schmiemann (2008) reveals that SMEs account for 99.8% of all European Union enterprise, however, most of these businesses are Micro-enterprises, and they are made up of 91.8% of the total companies. The empirical study of Oyeyinka (2013) implies that SMEs records 85% of jobs in the United Kingdom while in Nigeria, 96% of business are SMEs. For an in-depth understanding of the importance of SMEs growth and entrepreneurial skills, this study will give a brief description of Minority entrepreneur, entrepreneurship, and SME.

Schumpeter (1998) in his theory of innovation describes an entrepreneur as someone with foresight and innovative. Entrepreneurship is the creation of new firm that uses novelty to enter existing or new market while building healthy completion against the existing business (Stefanovic, Rankovic & Prokic, 2011; Ebiringa, 2011). Likewise, Stevenson (1993) implies that entrepreneurship generates growth, wealth, and well-being by calculated risk. Entrepreneurs are individuals who through creativity or innovation introduce new ideas that changes directions and the wheel of enterprise (Van Praag & Cramer, 2001). Also, Shane (2003) infers that an entrepreneur is an innovator who utilizes the opportunity to gain the benefits of the environment. Minority businesspersons according to (Krueger, 2007) are business owners of a majority population. Inducing from the above authors; this study, therefore, describes an entrepreneur as an innovator with creative abilities, who utilizes opportunities regardless of the risk involve.

Small and Medium Enterprise definition defers from one country to another. However, this study will consider SMEs definition in Nigeria and the United Kingdom. Oyebanji (2013) SME in Nigeria is any enterprise with a working “asset not more than five hundred thousand to two million naira with 100 to 199 employees”. While, SME in the UK is an “enterprise with less than 250 employees” and with a turnover not less than “25million pounds”. The experiential data on the influence of entrepreneurship and SMEs on the growth of an economy differs across countries (Oyebanji, 2013). However, many positive impacts of this venture have been noted in both developed and developing countries.

Entrepreneurship skills are vital to the growth and survival of Small and medium scale enterprise (Amatori, 2006). Therefore, skills are the knowledge demonstrated through actions or a unique performance in certain situations. Skills are attained and developed through training (Zehra, 2016). Nevertheless, reaching maintainable business growth is a task that requires special skills (Perks and Smith, 2006). With the above scenario, it is most likely for a business to succeed more if business owners could have sufficient entrepreneurial skills. These skills provide benefit for start-ups and it is as well useful throughout the lifecycle of a business. The purpose of this study is to develop an understanding of the essentiality of entrepreneurial skills and how these skills can impact SMEs growth. This study aims to examine the influence of entrepreneurial skills for achieving a successful business and identified the most valuable skills that can contribute to business growth.

Entrepreneurship is recognized as an important driver of economic growth, productivity, innovation and employment, it is widely accepted as a key aspect of economic dynamism transforming business ideas into economic opportunities (Kuratko & Hodgetts, 2008; Timmons & Spinneli, 2007). History shows that economic progress has been significantly driven by pragmatic people who are entrepreneurial, innovative, having ability to exploit opportunities and willing to take risks (Hisrich, 2005). In other words, entrepreneurship is one of the strategies designed to facilitate the participation of certain target groups such as women, youth or disadvantaged groups in the economy. Although many countries regardless of the level of economic development are making serious effort to support entrepreneurship, the impact of entrepreneurship appears to vary. Many times these facts are underestimated by small entrepreneurs and overlooked by support programs for development of this size of entrepreneurship. Development and support programs for Small & Medium. Enterprises (SMEs) should also focus on the area to help develop entrepreneurship skill and knowledge. However, due to lack of comparable result world-wide, there is need to understand how entrepreneurial skill identified elsewhere contributes to performance of SMEs in Cameroon (Gakure, Ngugi, Waititu & Keraro, 2013).

Entrepreneurial skill is the ability to combine both the innate characteristics and other resources, which depends on the individual’s entrepreneurial skills (Moska, 2013). Entrepreneurship is a characteristic embodied in entrepreneurs’ mind that help establish businesses, generate employment, create new products and services, stimulate innovation and improve welfare (Souksavanh, 2014). Entrepreneurial skills are the skills, which complement the entrepreneur to analyse situations, opportunities and environments, and assist the entrepreneur/manager to organize/manage and assume the risk and reward of a business or enterprise (Gakure, Ngugi, Waititi, & Keraro, 2013). According to Afolabi and Macheke (2012), skills essential for the success of SMEs include motivation, ability to gather resources, financial management, human resource management, marketing and technical skills. A weakness in a particular skill is associated with a decrease in the overall performance of the venture. Skilled entrepreneurs have all it takes to go after their dreams and reach their main goals. They have a way of surviving the tough situation unlike those who have totally no experience or lack important skills such as managerial, accounting, negotiation and customer relationship skills (Wamoto, Ayuma, & Kimani, 2016). The owner of a business is a key factor in business performance. The relationship between the owner of a business and its performance indicated that entrepreneurial minded owner grow their business to maturity due to their administrative competencies (Sarwoko, Surachman, & Hadiwidjojo, 2013).

SMEs play an important role in reducing unemployment and poverty. However, despite their significant socio-economic contribution, the failure rate among SMEs in South Africa is high. Small and medium size enterprises (SMEs) play a pivotal in economic development of many countries. Their roles include creation of employment opportunities; poverty reduction and economic growth of many countries. These benefits can be attributed to the ability of entrepreneurial skills in improving their business performance. Entrepreneurship plays an essential role in the economy’s growth and creates many job opportunities for a country (Atandi, 2021). Entrepreneurial activity is a nation’s long-term economic growth driver and is broadly accepted as the main feature of economic change. Entrepreneurship mainly focuses on converting business concepts into economic prospects. The people who own and operate enterprises are known as entrepreneurs and possess entrepreneurial skills that will contribute to the performance of their businesses.

Review of extant literature revealed that the ability of the SMEs to achieve higher performance has been inhibited by lack of skills on the part of the entrepreneurs. Despite all government interventions and supportive mechanisms, SMEs fail to grow from micro to small and small to medium and eventually large enterprise as it will be expected. Entrepreneurial skills complement an entrepreneur to analyze situations, opportunities, and environment and assist the business manager in managing and assuming a business’s risk and reward. Entrepreneurs have a way of surviving complex problems, unlike the non-entrepreneurs who lack critical entrepreneurial skills (Mwangi, 2020). The enterprise owner will therefore determine an enterprise’s performance.

The relationship between a business and the business owner indicates that an entrepreneurial, business-minded owner will grow their business to maturity due to their administrative competencies. The entrepreneurial skills essential for the success of small and medium enterprises include; motivation, financial management skills, human resource management skills, ability to gather resources, communication skills, managerial skills, marketing, and technical skills, among others.

1.2 Statement of the problem

SMEs play a very critical role in the Cameroon economy contributing almost 40 % of jobs and 30% GDP. However , the sector is characterized by high early failure due several challenges including inaccessibility to finance and lack of entrepreneurial skills among other factors .Extant literature has recognized the crucial role entrepreneurial skills in the success of SMEs as supported by the human capital theory (Becker, 1964) which postulates that investment in knowledge, skills and the abilities enhances the productive capacity, competencies to engage in a more enterprising, innovative and flexible manner in a dynamic business environment. Studies have indicated that lack of business growth and low survival rate have resulted to the inability of SMES to contributing to Cameroon’s GDP and the growth Bamenda II city as expected (Njoroge and Gathungu, 2018). In prior research has showed evidence of the influence of entrepreneurial on the performance of small and medium enterprises (Mwangi, 2020).

However, little or no similar studies have been done in in the Bamenda II city to determine the effect of entrepreneurial skills on the performance of SMEs. Hence this study sought determine the effect of selected entrepreneurial skills, that is , communication and entrepreneurial literacy skills on SMEs’ performance in the Bamenda II city. According to the literature of the study, entrepreneurial skills such as good communication, skills, and entrepreneurial literacy may affect the performance of SMEs. Several studies had been done on the connection between entrepreneurial skills and the performance of small and medium-scale enterprises, as will be given in this study. Moreover, many studies have been general. No study has particularly measured the effect of entrepreneurial skills on small and medium-scale enterprises, particularly in Bamenda II Cameroon, where SMEs had shown that they can perform. This, therefore, leaves a gap for more investigation.

1.2.1  Research question

1.2.1.1 The main research question

What is the effect of entrepreneur skill on the performance of small and medium size enterprise in Bamenda II?

1.2.1.2 Specific research question

1. What is the effect of Creative thinking skill on the performance of small and medium size enterprise in Bamenda II?
2. What is the effect of problem solving skill on the performance of small and medium size enterprise in Bamenda II?
3. What is the effect of communication skill on the performance of small and medium size enterprise in Bamenda II?

1.3 Research objective

1.3.1 Main research objective

To analysis the effect of entrepreneur skill on the performance of small and medium size enterprise in Bamenda II.

1.3.2 Specific research objective 

1. To establish the effect of Creative thinking skill on the performance of small and medium size enterprise in Bamenda II.
2. To demonstrate the effect of problem solving skill on the performance of small and medium size enterprise in Bamenda II.
3. To evaluate the effect of communication skill on the performance of small and medium size enterprise in Bamenda II.