Financial Resources, Legal Structure, and Business Performance: A Study of Micro and Small Enterprises in Lagos, Nigeria

Bamidele A WALE-OSHINOWO; Kehinde O OLA; Peter N AMAH

Bamidele A WALE-OSHINOWO University of Lagos
Kehinde O OLA Glorious Vision University, Ogwa, Nigeria
Peter N AMAH University of Lagos

Keywords: Financial Resources, MSEs, Legal Structure, Performance, Sole Proprietorship.

Abstract

Focusing on developing countries in Sub-Saharan Africa, this paper provides further insights into the drivers of performance in micro and small enterprises (MSEs). A cross-sectional survey was conducted using a structured questionnaire to collect data from 237 owner-managers of registered MSEs in one of the busiest local government areas (LGAs) in Lagos, Nigeria. The study investigated the association between access to financial resources, legal structure, and MSE performance. The findings reveal that both access to finance and legal structure have positive and significant effects on MSE performance. However, deeper insights were provided with the discovery of a negative moderating effect of the sole proprietorship legal structure on the relationship between access to finance and performance. This is particularly notable given that a majority of the sampled businesses were registered as sole proprietorships. The paper concludes with policy and practical recommendations to improve MSEs’ access to finance and support legal structures that are more growth-oriented for them.