Effect of Strategic Management on the Performance of Small and Medium Enterprises in FCT-Abuja

Abstract

Small and Medium-Sized Enterprises (SMEs) are globally recognized as engines of economic growth and development. Governments, particularly in developing nations, have made enormous efforts and enacted laws to improve the capacity and viability of small and medium-sized enterprises (SMEs). However, despite government institutional and policy support, there is a great deal of anxiety and scepticism over the capacity of small and medium-sized enterprises (SMEs) to promote economic growth and development, particularly in developing nations. Consequently, this study investigates the impact of strategic management on the performance of small and medium-sized businesses in FCT-Abuja. The research design utilized in this study is a causal comparative design. The study’s population comprises of 38,003 registered SME owners operating at all levels in Federal Capital Territory (FCT), Abuja, from whom a sample of 388 was drawn using the Taro Yamani formal questionnaire. The study’s findings indicate that Strategy Formulation (SFN) has a positive and substantial (0.231, p < 0.05) effect on Business Performance. A 1% increase in SFN is expected to result in a 23.1% increase in performance. Similarly, Strategy Implementation was found to have a favourable and substantial (0.231, p < 0.05) effect on SMEs’ performance. Business performance is projected to grow by 41.2 percent for every one percent increase in strategy adoption. This established strategy implementation as the component of strategic management with the greatest impact on corporate performance. Furthermore, Strategy Evaluation (SEV) was expected to improve performance by 9.6% for every 1% increase. The study concluded that all strategic management components were important and positive drivers of company performance among FCT SMEs. As a result, the study advises SMEs to take strategic planning and formulation seriously, as these are the factors that determine the tone of a company’s strategic management framework.