EFFECT OF BOOTSTRAPPING DIMENSIONS MODERATED BY INNOVATION AND COST OF DOING BUSINESS ON SMALL AND MEDIUM SCALE ENTERPRISES PERFORMANCE IN SOUTH-WEST, NIGERIA

Abstract

Bootstrapping is a financial approach of implementation of a variety of methods tofundabusiness and stresses internal financing methods, with minimal amounts of debt andequityfinancing, or from non-traditional sources in which the use of it allows an entrepreneurtocontinue operations at a time when obtaining capital from banks is not realistic. Knowledgeassociated with bootstrapping finance can play a vital role in protecting small businesses.Thus, this study investigated the effect of bootstrapping dimension moderatedbycostofdoing business and innovation on small and medium enterprises performance inSouth-West,Nigeria. The study adopted survey research design and the populationof thestudycomprised 14, 527 owner/managers of small and medium scale enterprises (SMEs) inLagosand Oyo States. The study utilized stratified simple random sampling technique. Asamplesize of 750 owner/managers of SMEs was enumerated using Cochran’s (1977) formula.Adapted questionnaire was used and 86.4% response rate was achieved. The Cronbach’sAlpha reliability coefficients for various constructs ranged from0.736 to 0.949. Datawereanalyzed using regression method. The findings revealed that the effect of bootstrappingdimensions (owner’s financing, subsidy financing, delayed payment, joint utilization, andsocial capital) on selected small and medium scale enterprises (SMEs) performanceinSouth-West, Nigeria was not significantly moderated by innovation and cost of doing business(β=1.825E-7, ΔR2 = 0.000, ΔF = 0.123, p > 0.05). The study concluded that bootstrappingimproved performance of SMEs in South-West, Nigeria. It was recommendedthatmanagement of small and medium scale enterprises in South-West, Nigeria shouldpaymoreattention on subsidy financing, delayed payment, social capital with less attentiononjointutilization in order to improve their performance. Keywords: Bootstrapping, Cost of Doing Business, Innovation, Small and MediumEnterprise,Performance