Effects of Socio-Cultural Realities on the Nigerian Small and Medium Sized Enterprises ( SMEs ) : Case of Small and Medium Sized Enterprises in Lagos State

Socio-cultural realities are importance components in the Nigerian business environment. There is a shortage of literature and studies that linked socio-cultural realities to business development and performance. Small-Medium Enterprises (SMEs) constitutes over 70 per cent of the Nigerian businesses and characteristically informal. The objectives of this paper are in two-folds, namely (i) identify socio-cultural realities in the SME business environment in Nigeria and; (ii) examine the impact of these factors (in i) on the development of SMEs. Socio-cultural realities were measured from three major factors, namely attitude; religion and values: each of this factor were further categorised into several level of constructs. Responses from ten (10) SME owners/representatives in the five (5) major districts of Lagos state identified the socio-cultural realities as key factors affecting their businesses. A further research is recommended to further establish whether these results reflect the general condition in other states of Nigeria.


Introduction
The business environment of the 21 st century is an intertwined force of complex socio-cultural, economic, political and technological factors creating intricate challenges for owners of Small and Medium Enterprises (Tesfayohannes, 2012).This growing complexity has created challenges for Nigerian business entrepreneurs as a study by KPMG (2012), titled 'Confronting Complexity' identified common factors in the Nigerian business environment among which are the increased cost of business; greater number of risks; difficulty in making business decisions; delay in deals and transactions.In addition, the World Bank's 'Doing Business' index (DB) ranked Nigeria 133 position out of 183 countries that were surveyed in 2011 and 2012 respectively.The DB index measures the ease of doing business in the selected countries such that countries with high score indicate difficulty in business environment, while countries with low ranking indicate a favourable business environment.However, underlying socio-cultural realties were not taken into consideration (World Bank, 2012).George (2011), succinctly captured the importance of socio-cultural realities on business environment and revealed that considerable socio-cultural difference exist between Nigeria and Great Britain making it difficult to transfer management practices from one area to another given the trend in globalization, multi-nationalisation and internationalization of businesses.
Socio-cultural realities remain an important component of the Nigeria business environment as they influence business activities, technology and performance, (Odekunle, 1989;Olaoye, 2003;Aghalino, 1998;Odetola & Ademola 1986).Characteristically, most African entrepreneurs are owners of SMEs and they are confronted with the challenges of nurturing their businesses and promoting the tradition of innovation and entrepreneurship (OCED, 2009).However, rapid changes in the global business landscape such as technology, transport, trade, commerce, communication, are currently affecting African entrepreneurs, who are intrinsically attitudinal, and sedentary (Ekeledo & Bewayo, 2009).Similarly, anecdotal evidence indicated that African entrepreneurs are concentrated mainly on their local market spheres, with a low potential for long-term growth and development (Beyene, 2002).This reveals that SME owners are embedded in a socio-cultural and individual aspect of culture (Dorfman & Howell, 1988).Likewise, Aldrich and Zimmer (1986) specify the importance of socio-cultural realities in the creation of new businesses and entrepreneurship which they contend is entrenched in social perspective.The socio-cultural aspect deals with the institutions, norms, roles and values as they exist outside the individual (SME owners) and the latter captures the subjective aspect of culture as demonstrated by individual's perception of the components of the cultural system.
Cultural system can be likened to an iceberg.The external or conscious as well as the internal or subconscious aspect: where the former is the visible aspect that can be seen, such as behaviour and some beliefs, while the subconscious aspect include that part that is not seen, such as values and norms (Hall, 1976).Similarly, Hofstede (2001) noted that human behaviours are influenced by socio-cultural practice and some actions cannot be divorced from their socio-cultural context (Bloodgood et al., 1995).Research and past studies have examined factors that differentiate small businesses from large firms (Longenecker et al., 1989;Vitell et al., 2000).They discovered that small firms are embedded in unique circumstance and prone to social and ethical issues.
This paper is divided into four parts.The first section presents a theoretical background of the study; next, the results of the interview of the 10 SME owners were presented.The discussion of the findings is dealt with in the third part.The final part presents the conclusion.

The Socio-Cultural Environment
Wetherly (2011) described the socio-cultural environment as consisting of everything that is not contained within the economy or political system.According to him, socio-cultural setting is made up of collection of activities, and the relationships people engage in their personal and private lives which include population features, age, ethnicity, religion, values, attitude, lifestyles and associates.These environmentally relevant patterns of behaviour lead to the creation of different cultural values in different societies, some of which influence the decision to create new businesses.Therefore, culture, as distinct from political, social, technological or economic contexts, has relevance for economic behaviour and business performance (Shane, 1993;Shapero & Sokol, 1982).
Culture is "the 'software of the mind'; a 'collective mental programming' of the people'".It is the combination of material and spiritual wealth designed by man through process of social and historical growth (Hofstede, 1998); the total pattern of thinking, emotions and acting; that impact on the ordinary and menial things in life such as greeting, eating, decision in expressing or not expressing ones emotion, interacting with people, making love, or general body cleanliness (Hofstede, 1991); the means, by which one makes meaning in life through interacting with the environment is culture (Cohen, 1993); the way of life of a people; the summed total of their behaviours, attitude and material things which controls their actions in a deep and persisting ways which is beyond their control (Hall, 1976).In similar vein, culture is the individual distinctive way of identifying with the man-made aspect of the environment, the perception of rules, norms, roles, and values which is affected by different levels of culture which include language, gender, race, religion, place of residence, and occupation which as a way of impacting on interpersonal behaviour (Triandis, 1972).

Attitude
Attitude is a mental and neural state of readiness, systematized through knowledge.It has the ability to exert a directive and forceful influence upon individual's response to all objects and situations around which it relate (Allport 1935); they are better predictors of behaviour (Krosnick & Abelson, 1992).Culture is one of the main sources for the formation of attitudes.Other sources include generation effects, social role, laws, mass media, total institutions, school, family and parents, peers and reference groups and direct experience (Douglass & Pratkanis, 1994).Attitudes are learned predispositions (Manstead, 1995) which can result to a cognitive and emotional orientation toward specific objects and situations (Ajzen & Fishbein, 1980;Hofstede, 2001;Fisher & Lovell, 2006).(1973) opined that value is a standard that guides and determines actions, attitudes in the direction of objects and states, ideology, presentations of self to others, assessments, decisions, justifications, comparisons of self with others, and attempts to influence others.Values are guiding principles that influence people's decision making, they are stable trans-situational goals, they vary in importance, and they motivate behaviour that are similar to them (Schwartz & Bardi, 2001, 2003;De Dreu & Nauta, 2009;Schwartz, 2005).Roccas et al (2002) believed that values capture a part of personality that is pertinent to motivation.However Hofstede (2001) postulated that values is the inclination to choose certain states of affairs to others.Certain values are universal and relate to the society, family and to one's work life (Kilby, 1993;Kluckhohn, 1951).Business owners' success measures often reveal their value orientations (Gorgievski et al., 2011, p. 11).

Religion
Religion is one of the commonly mentioned determinate of the moral values that buttress moral principles.The major world religions teaches that an omniscient God observe human actions and hold people accountable for their actions (Emerson et al., 2010).Max Weber (1905) in his work 'the protestant Ethic and the spirit of capitalism' identified the interconnection between religion and the marketplace.Weber proposed that a relationship exist between certain religious teachings and economic behaviour.The belief was that God desired profitability to prove stewardess and that the person who fulfils a calling does not waste time and resources (Hansin, 1963;Barbalet, 1980;Goldman, 1990;Koch, 1993).In similar vein, religion is an emotional attachment, a powerful emotive relationship to things (Kirkpatrick, 2005).

Socio-Cultural Realities and Small and Medium Sized Enterprises (SMEs) in Nigeria
Development economists and scholars on enterprise consensually identified three factors that characterises SMEs business environment (Allen & Udell, 2004) and fourth factor common in developing countries (Allen & Udell, 2004) these include: the continuation of marked informational asymmetries; lack of transparency accounting and reporting systems; lack of succession plan; poor corporate governance practice-unfriendly business ethic and culture.Similarly, Basil (2005) identified several factors responsible for the slow growth and premature nature of SMEs in Nigeria, which include dearth of capital, insufficient market demand, poor succession plan, poor managerial competency, lack of adequate infrastructure and support, family interferences with businesses, poor financial management skills, and high level of unprofessional practices.
SMEs in Nigeria operates in an informal settings and are generally a one-man business show or at best managed by two or three family members, relations or friends, who handles all business decisions.Characteristically, it difficult to separate private and business interest as they are subjectivity and personality plays a critical part in all aspect of the business.Bolton (1971) described SMEs as having a personalised style of management devoid of formal structures; with ownership and control solely in the hands of the owner (Spencer, 1999).SMEs has been recognized a key factor in investment in social capital which can assist in tackling societal challenges, however this is not reflected in their social practice because they are mostly driven by personal moral conviction and not business reason (Habisch, 2004).
SMEs will continue to be the prime vehicle for the development and growth of both the industrialised and emerging countries (Zacharakis et al., 2002).It has become the major contributor to employment, revenue generation, innovation and technology progression (Kotey & Meredith, 1997).SMEs definition varies from industry to industry, country to country, size to size, and number of employees to number of employee (Conrad & Darren, 2009).SMEs businesses can be classified into three groups: the micro, small, and medium enterprises.The micro SMEs are the smallest among the groups while the small enterprises are larger than the micro-businesses in terms of size, number of employees, structure, capital investment and economic contributions (Darren et al., 2009).According to the European Union (EU) small enterprises are businesses that employs up to 50 employees while the medium enterprise employs less than 250 employees and an annual turnover not exceeding 50 million euro (European Commission, 2003).On the other hand, World Bank defined SMEs as enterprises with a maximum of 300 employees and 15million in annual revenue (Gibson et al 2008).While the Central Bank of Nigeria, in its Monetary Policy Circular No. 22 of 1988, defined small-scale businesses as having an annual turnover not exceeding 500,000 naira, asset base (excluding land) of between 5 million naira and 500 million naira, and labour force of between 11 and 300 in its employment (Ajose, 2010).The medium are larger than both the micro and small enterprises in operations, manpower capacity, staff strength, structure, capital investment and size (Esuh Ossai-Igwe et al., 2012).

Hofstede's Cultural Dimensions
(Hofstede1998:1) identified five cultural dimensions of culture which include: Power Distance Index (PDI); Individualism (IDV); Masculinity (MAS); Uncertainty Avoidance Index (UAI) and; Long-Term Orientation (LTO).The PDI measures the degree or level in which the less influential members' expectation that power is distributed unevenly.A high PDI indicates that the less powerful members accept uneven distribution of wealth and power in the society, while a low PDI means that the society equality is accepted by everyone.IDV explains the extent of ties among societies, communities and individuals.A high IDV means that individual rights and individualism is dominant and that people are more concern for themselves and family, while a low IDV portray a society where close ties among families exist and collectivism.MAS examine the extent to which mannishness operates in a society.Essentially, it measures what society sees as values such as wealth acquisition, competition (masculine) quality of life, and relationship building.A high MAS indicates that the society values aggressive behaviour, while a low MAS means that society values less aggressive traits and ''feminine'' traits dominate.The UAI index measures that degree of tolerance of vagueness and obscurity within a society.A high UAI index shows that the society has a low tolerance for uncertainty and ambiguity, while a low UAI indicate that the society pay less attention to insecurity, risk and uncertainty and that such society is prone to greater risks.The LTO also known as 'Confucian dynamism' examines the extent to which the society deprecates or extols long-term traditional values.A high LTO shows that a given country extols hard work, reward compensation systems, tradition, while a low LTO indicates that the society deprecates long-term traditional values and the orientation of short-term results is dominant.The five dimensions of culture play a critical role as it show that events in the environment consciously and unconsciously influence our thought process, perception and action (Hofstede, 1994).

The Iceberg Model: Conscious and Subconscious Culture
The Iceberg Model of Culture propounded by Hall (1976) relates culture as an iceberg.An iceberg contains element that are transparent (above the water) and other element that are invisible (hidden below the water).Interestingly, the larger part of the iceberg is not seen as they are hidden.He maintained that a larger aspect of our lives and work are inundated as the invisible part of an iceberg.The larger invisible parts are unobserved and often ignored.He opined that the impact of underlying subconscious aspect on the actions, behaviour and perception of people need to be given consideration.The physical (conscious) aspect of culture is visible, such as behaviours, actions and beliefs (tip of the iceberg), while the invisible and unconscious aspect (larger part/below the surface) include underlying values, traditions, beliefs, taboo trigger behaviour and action.
Therefore, the conscious aspect of culture which may be visible are necessary explanation of action, behaviour, perception of people , while the larger subconscious aspect that are not visible are underlying factors sufficient to capture actions and behaviours.Culture therefore cannot be understood by the visible aspect only, but rather with the underlying invisible values, beliefs, traditional norms (Hall, 1979).

Methodology and Methods
Development of cultural measurement constructs; attitude, values and religion from which the interview questions were derived; were developed from existing theories and literatures (Hofstede, 1988), Hall, 1976), and Wetherly (2011) socio-cultural concept.The population of study is the Small and Medium Sized Enterprises (SMEs) in Lagos state.A purposive non-random sampling technique was used to draw out 10 SMEs spread across key industries such as farming/poultry; trade and commerce; business support services; financial services and; food & restaurant in the five major geo-political zones (Ikeja, Ikorodu, Eti-osa, Badagry and Lagos Island areas) of Lagos state.Lagos has a total of about 3,862 numbers of SMEs making it the state with the largest concentration of SMEs in Nigeria (NBS & SMEDAN (2010, p. 118).Table 1 shows the characteristics of respondents.Overall, the 8 SME owners and 2 managers participated in the face to face interview.
A qualitative research approach was applied for the purpose of survey of opinions of the impact of socio-cultural realties on SMEs in Lagos state.Qualitative research produces a detailed data on the phenomenon being investigated as they are derived directly from people involved or stakeholders (Patton, 2002).Qualitative research is the best method for examining intangible or non-quantifiable factors such as culture, norms, religion, status, which are not easily captured by other methods (Pope, 2000;Denzin, 2000;Nkwi, 2001).It includes focus group discussions (FGDs) interviews.

Results and Discussions
Following from the pre-test survey of some selected SME owners in Lagos state, interviews were conducted with 10 selected SMEs spread across the 5 major districts in Lagos state.The respondents are either SME owners or their representatives.The same sets of questions were administered to the SME owners during the interview as a way of ensuring validity and minimized respondent bias.A generalized opinion of the respondents is captured in Table 2 below.The first part of the column depicts the various construct levels for the three key socio-cultural components (Attitude, Values and Religion).The subsequent columns, except for the last column are the general opinion of SME owners, while the last column indicates the impact assessment.

Attitude
Attitude is measured across three levels, namely attitude to time; attitude to work and; attitude to contractual obligation.Table 2 revealed that the subjects (SME owners) personality and orientation are major factors influencing their attitude generally.The result further revealed that attitude to time also depends on the business activity involved.SMEs in livestock production and financial services would display a better attitude to time management than others.Few SMEs engaged skilled employees and are less concerned about the workers welfare.The attitude to work by owners and employees varies across all the cases considered (table 2).SME owners have close family ties and social engagement.

Values
According to Parsons (1951, p. 11-12) 'value is an element of a shared symbolic system which serves as a criterion or standard for selection among the alternatives of orientation which are intrinsically open in a situation'.Culture influences human behaviour through values and ultimately as a means to an end (Swidler, 1986).The general opinions of the respondents on the subject are presented in Table 2.Under the three levels of constructs, the respondents business values are tied to socio-cultural realties include family and friends influence decision making; family members occupy key strategic positions; and the lack of separation between ownership and management of business resources (Table 1).Poultry/farming SMEs operate more like a sole proprietorship business.

Religion
Swidler (1986), offers explanation of the image of culture as such as symbols, rituals and world view which are disposable to people for solving real-life problems.The general opinion on the religion as a socio-cultural realities in the SME settings revealed SME owners own religious beliefs; prayers and fasting to overcome challenges; some SME include prayer meeting involving all members of staff on daily basis; some SMEs engaged the services of priest; other use religious symbols as a way of religious affiliation (table 2).

Conclusion
The submission of this study is that SME businesses are better understood from the perspective of the socio-cultural context; any convincing and comprehensive explanation must consider the social and cultural sides of business behaviour.Socio-cultural realities are strong components of business environment as they manifest themselves in various forms including religious beliefs, traditions, language, religious symbols and affiliation.Socio-cultural realties can also take the form of traditional beliefs which are either imbibed or accepted as a standard business practice.SMEs are characteristically informal, high risk business; poor management orientation and business ethics.Being a one-man business or at most three, SME businesses are tied to culture, tradition and religion as typified by owners' orientations, values and personality.Future studies in this area must take into account the importance of socio-cultural realties as they affect the perception, orientation and value proposition of SME owners and the business generally.

Table 1 .
Characteristic of respondents Source: Derived from Researcher's computation, May 2013.

Table 2 .
The impact of socio-cultural realities on SMEs in Lagos State: qualitative analytical framework

and Medium Sized Enterprises in Lagos :Generalized Narrative analysis
Derived from Survey of Selected 10 SMEs in Lagos State, 10-20 th July, 2013.

Table 1 .
Sector distribution of SMEs by states in Nigeria Adapted from Survey Report on Small, Medium Enterprises in Nigeria 2010, National SMEs Collaborative Survey.Collaboration between NBS & SMEDAN (2010:118).