1.1 Introduction
Economy digitalization increases the reputation and image of the economy that adopt it fully as global users can access information on the economical collection and make full utilization of its resources from distant locations. SMEs by digitalizing their business processes, business transactions will be cost effective, time saving and less stressful. There will be high-quality digital images of the firm’s products online and sales and payments will be made online as well, this will also reduce wear and tear on brittle and fragile documents. Despite the undeniable need for digitalization of SMEs, there are also significant opportunities that this phenomenon can bring about to the growth of an economy.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
In today's business world Digitalization has become the watch word. Digital transformation is a big challenge for SMEs today as several industries and companies face lots of pressure to transform their businesses to the digital way, however, technological transformation of businesses should be centered on enhancing customer experience, optimizing operational processes and augment business models. SMEs that are highly innovative are said to be faced with financial, skill shortage and financial challenges which affect their growth, while traditional companies that are facing the digital transformation process risk tend to lose their competitiveness.
Digitalization of a business does not really constitute creation of a new business, but remodeling the existing ones to take advantage of doing business in a new way. In point of fact entrepreneurs continually make use of ICT-based e-commerce to gain competitive advantage in the global marketplace. Small and Medium Enterprises in the Nigerian economy is said to make tremendous contributions to important economic indicators as well as household incomes which impacts positively to its growth. Despite the growth of ICT-based e- commerce within SMEs in developed nations, the ICT adoption rate of SMEs in Nigeria has remained relatively very low and this has contributed to its slow pace of economic growth and development. However, global competitiveness and the quest to stimulate economic growth are some of the major factors why Entrepreneurs need to adopt ICT.
Emphasis made on impact of ICT to boost productivity and performance of SMEs can be considered as a great issue of concern to Entrepreneurs, scholars and practitioners in a developing economy like Nigeria. Globally, the use of ICT to boost productivity and performance is one of the greatest challenges being faced by the SMEs particularly the developing nations and this is due to the lack of knowledge on the benefit of ICT in their businesses. Thus, there is an urgent need for a change in SMEs operation to meet the global challenges. The magnitude at which SMEs will benefit in the inclusion of ICT in its business activities is beyond comprehension. However, the impact of ICT on operational performance of SMEs in Nigeria has not been largely explored and this is because attention has been focused more on ICT Investment in SMEs, ICT inclusion and usage in the financial perspective as Information Technology is just acquiring wider acceptance in SMEs of Nigeria.
Therefore, in Lagos State where the research was carried out, the activities that was conducted is to know the impact study of digital economy on the sustainability of small medium businesses in Nigeria.
1.3 Statement of Problems
Investigation revealed that the wide acceptance and popular usage of Digital Media has made it possible for anyone who is interested in to set up business of different types at anytime. However, different forms and big corporate are reaping benefits of so many diverse types while the SMEs are still lagging far behind in adaptation of this innovative technology of the present century. It is an alarming issue that SMEs are held below the bottom in the competing world regarding earning of profits compared with multinational companies mainly because of not employing modern techniques like Digital Marketing in the business activities, marketing and the advertising campaigns.
Consequently, it is important that a study be undertaken to identify and highlight the probable benefits, attached deficiencies and managing options for the potential disadvantages of Digital Marketing so that SMEs could join the economic and business competition with the rapidly growing companies. This study will take a look at the effect of digital marketing on performance of small and medium scale enterprises in Lagos.
Especially for SMEs, due to restrictions on marketing resources, news, advertising, large-scale promotional activities, they have less chance of publicity, so website promotion via the Internet means is much more important for them than big ones. Thus, this study investigates relationship between online marketing and small and medium sized businesses productivity in Lagos metropolis.
1.4 Aim and Objectives of Study
The aim of the study is to examine the impact study of digital economy on the sustainability of small medium businesses in Nigeria using five selected using Five Selected SMEs in Lagos State as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To identify the impact that digital economy has on business process in small and medium enterprises
- To determine the effect digital economy has on business process in small and medium enterprises
- To find out the sustainable approach used by SMEs in Lagos to make their products and services appeal to customers
- To establish the nature of the relationship between digital economy and small and medium-sized businesses’ productivity
- To examine the need and opportunities in sustainable digitalization of small medium businesses in Lagos State.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Does digital economy have effect on business process in small and medium enterprises?
- What is the impact that digital economy has on business process in small and medium enterprises?
- What is the sustainable approach used by SMEs in Lagos to make their products and services appeal to customers?
- What is the nature of the relationship between digital economy and small and medium-sized businesses’ productivity?
- What are the need and opportunities in sustainable digitalization of small medium businesses in Lagos State?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Digital economy does not have any significant effect on business process in small and medium enterprises (SMEs)
- H1: Digital economy does have a significant effect on business process in small and medium enterprises (SMEs)
Hypothesis Two
- H0: There is no significant relationship between digital economy and small and medium-sized businesses’ productivity
- H1: There is a significant relationship between digital economy and small and medium-sized businesses’ productivity
1.7 Significance of Study
The findings of this study will be beneficial to organizations as well as firms especially on the need to focus generally on digital marketing, individual, group/team and organizational creativity. Also, the findings of this study will serve as a medium of awareness and enlightenment on the many environmental trends affecting organizations in recent years and proffer possible panacea to such problems as they rear heads.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The study focuses on the impact study of digital economy on the sustainability of small medium businesses in Nigeria using five selected using Five Selected SMEs in Lagos State as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Medium-sized Enterprises: These are defined as enterprises which employ fewer than 250 persons, and whose annual turnover does not exceed N50 million or whose annual balance-sheet total does not exceed N43 million.
Small Enterprises: These are defined as enterprises which employ fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed N10 million.
Micro Enterprises: These are defined as enterprises which employ fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed N2 million.
Digital Marketing: This refers to all forms of internet advertising, internet payment system, internet marketing, internet customer support service and internet order and delivery.
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