INSTITUTIONAL ENVIRONMENT AND SMALL AND MEDIUM ENTERPRISES (SMEs) DEVELOPMENT IN NIGERIA

This study examines the possible influence institutional environment has over small and medium enterprises development in Nigeria. Five variables are identified as proxies for institutional environment in the study, namely: normative institutional environment (NORMIEV), political institutional environment (POLINEV), regulatory institutional environment (REGUINEV), legal institutional environment (LEGALIEV), and cognitive institutional environment (COGNNIEV). They all serve as regressors, as they are regressed against small and medium enterprises development (SMEDEV), the dependent variable through the use of the ordinary least squares technique. Prior to the OLS estimation, diagnostic tests are conducted using Augmented Dick Fuller Unit Root Test, Error Correction Model and Co-integration. The nature of data collection is in time series, all sourced from United Nations Development Program (UNDP), Global Entrepreneurship Monitor Data base, Institutional Governance Indicators data base in World Bank and Corporate Affairs Commission, (CAC) Abuja Nigeria. The study concludes that except regulatory and legal institutions in Nigeria, other dimensions of institutional environment have not effectively stimulated SMEs development in Nigeria rather have retarded the formation of SMEs in Nigeria. The study recommends that policy makers should effectively channel their effort towards enhancing thequality of legal environment,and the quality of regulatory environment. The negative effect of weak quality of political institutional environment in Nigeria can be mitigated if government of Nigeria intensifies efforts in building strong and stable political environment. Government of Nigeria should reform the cognitive institutions through revamping of educational system (primary, secondary, and tertiary education) as center of innovation where people can gain valuable knowledge and skills to engage themselves in entrepreneurial ventures. Government of Nigeria should be sincere and committed in promoting moral, ethical and positive cultural norm in the country to mitigate the negative effect of weak normative institutional environment on SMEs development in Nigeria.

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INSTITUTIONAL ENVIRONMENT AND SMALL AND MEDIUM ENTERPRISES (SMEs) DEVELOPMENT IN NIGERIA

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