Pages: (25-45 )
Abstract
The study examined the impact of external environmental variables on the performance of small and medium firms. The research employed a descriptive survey design. The study utilised primary data. The research population consisted of 20,326 small and medium firms in Southwest Nigeria. A sample size of 392 small and medium companies was obtained utilising the Taro Yamane method for sample size estimation, and a multi-stage sampling procedure was employed for the study. Initially, a stratified random selection method was employed to identify Lagos, Oyo, and Osun states as those with the largest concentration of small and medium companies in Southwest Nigeria. Multiple regression analysis was employed to analyse the data produced for the investigation. The findings indicated that inflation (β = -0.45, p < 0.01), taxation (β = 0.32, p < 0.01), and cultural attitude (β = 0.50, p < 0.01) significantly influenced the performance of small and medium firms. The research revealed that environmental determinants forecast the performance of small and medium firms in Southwest Nigeria. Consequently, the report advised the Nigerian government to refrain from frequent policy alterations and to ensure the stability of democratic institutions and political unity. Moreover, the government should provide tax incentives, particularly designed for SMEs, to promote investment and expansion. Furthermore, entrepreneurship must be encouraged by community initiatives that foster favourable cultural perceptions of company ownership.
Keywords: SMEs, Inflation, Taxation, Southwest, Nigeria,