Abandonment of Capital Investments and Survival of Small and Medium Enterprises: Evidence from Nigeria

Sehilat Bolarinwa (), Babatunde Yusuf (), Khadijah Idowu () and Jamiu Tijani ()
Additional contact information
Sehilat Bolarinwa: LAGOS STATE UNIVERSITY
Babatunde Yusuf: LAGOS STATE UNIVERSITY
Khadijah Idowu: LAGOS STATE UNIVERSITY
Jamiu Tijani: LAGOS STATE UNIVERSITY

No 401626, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: This paper presents empirical evidence on the impact of abandonment of capital investments on the survival of small and medium enterprises (SMEs) in Nigeria. It employs mixed methodological framework to question the extent to which abandonment of capital investments affects the performance of SMEs in five districts in Lagos. The study adopted survey inferential design. A total of 250 questionnaires were administered to different sets of enterprises, out of which 220 valid responses were received representing 88 per cent. Moreover, judgmental sampling technique was adopted for the purpose of this study. To validate or give further support to the results from specific data sources, triangulation method was used. This method includes both qualitative and quantitative phases. Content validity was adopted. Data gathered from the questionnaire were analysed with the aid of descriptive statistical techniques (such as standard deviation and arithmetic mean) and inferential statistical techniques (Regression analysis and ANOVA). Furthermore, multivariate analysis of factor analysis and its constituent tests were equally employed. Findings related to the study clearly show that the performance of SMEs is characterised by numerous problems including: lack of proper and effective capital budgeting mechanism, failure to access loan, lack of funds, strict banking policies, unethical business practices, lack of stable business policy, among others. The study also discovers that poor capital budgeting practice impacts on the survival of SMEs in Nigeria. The main contribution of this paper to knowledge lies in capital budgeting decision and abandonment option. This has strengthened our understanding that abandonment of capital investments is a critical factor in explaining SMEs survival in Nigeria.

Keywords: Abandonment; Capital Investments; Survival; Capital Budgeting Theory; SMEs (search for similar items in EconPapers)
JEL-codes: C12 O10 O22 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-07
New Economics Papers: this item is included in nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 137-154

Downloads: (external link)
https://iises.net/proceedings/2nd-economics-financ ... cid=4&iid=7&rid=1626 First version, 2014

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:0401626

Access Statistics for this paper

More papers in Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences
Bibliographic data for series maintained by Klara Cermakova ().