AN EXAMINATION OF POTENTIAL BENEFITS AND CONSTRAINTS ASSOCIATED WITH SMALL BUSINESS USE OF E-COMMERCE

BACKGROUND OF THE STUDY: Small businesses are essential for economic development (Van Praag & Versloot, 2007; Acs et al., 2008; Fumo & Jabbour, 2011), and in Nigeria they make up 91% of the formal businesses, contribute 34% towards the Gross Domestic Product (GDP) and absorb 60% of the labor force (Small Medium Enterprise, 2015). Small businesses are in a better position than larger businesses to assume a more expedient role in economic development, especially within the economies of developing countries (Kayed & Hassan, 2011). Booyens (2011) confirms that Nigerian small businesses play a significant role in job creation and poverty alleviation.

Nigeria is not regarded as a robust entrepreneurial economy. Small businesses struggle to grow, despite Nigeria’s efforts to foster their growth (Maye, 2014). This lack of growth and robust entrepreneurial economy is because Nigeria has a larger necessity- motivated rather than opportunity-motivated nascent entrepreneurial population (Lindsay, 2014). This is to be expected against the background of a high unemployment rate of 25.27% from 2000 until 2015 (Trading Economics, 2016).

Small businesses, however, face numerous constraints (Bridge et al., 2003; Department of Trade & Industry, 2004), impairing both their performance and survival rates (Reiss, 2006). The survival of small business is influenced by the business life cycle. Little is documented on small business constraints in Africa (Irwin, 2011a) and in Nigeria. Some small businesses want to grow, but are constrained by attitudinal, resource, operational and strategic barriers to business development (Westhead, et al., 2011), which lead to most businesses failing within a year or two (Brink et al., 2003; Kuratko, 2014).

Small and medium size enterprises (SME) are regarded as the engine of economic growth in all economies of the world. Not only in the developing or the least developed countries (Wooldie & Adersua, 2004; Gerrad et. al, 2003; Hamilton & Dana, 2003) of the world, SMEs play a major role in developed economies. It accounts for 85% new job creation in the United States. However, the small business sector also has the highest birth as well as mortality rates across cultures. From a review of recent comparative literature on the small business, certain common issues of concerns may be identified: Morris et al, (2006) discuss the growth dilemma especially of female entrepreneurs. In another study, Morris et. al (2000) report about the lack of understanding of the business concepts by the historically disadvantaged South African owners/Managers. Madill et al. (2006) highlights the issue of access to debt financing; Tagoe, et al, (2005) examine the challenge of affordable credits to urban SMEs in Ghana; Mambula (2002) examines how the issue of collateral for lending to small business becomes an impediment for the growth of small business in Nigeria. Morris et. al (2002) discuss ethical dilemmas of the entrepreneurs.