DETERMINING THE UNDERLYING DIMENSIONS OF COMPETITIVE STRATEGIES AND PROFIT OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Abstract

This study tested the underlying dimensions of competitive strategies and profit of SMEs in Nigeria. Specific goals were cost leadership, differentiation, and focus tactics. According to PwC's 2021 report, there are 27,942 SMEs in Nigeria, with one state in each of the six geographical zones. A survey research design was used for the study, and the sample size of 394 managers/owners of SMEs served as the study's participants. This number was calculated using Yemen's formula. Principal component analysis was suitable at .802 and the preliminary assessment validated the dataset's suitability for analysis by the validity results of KMO and Bartlett's test, which show that the variables are highly significant. A reliability index of.853 was stated as the outcome. With the use of the Statistical Package for Social Sciences, participant data were presented in tables and analyzed using Pearson's Correlation Statistics and Multiple Regression Analysis (SPSS 23). Hypotheses were evaluated at a significance level of 0.05. Results of tested hypotheses confirmed that focus strategy (51.6%), differentiation strategy (73.4%), and cost leadership strategy (34.9%) all had a favorable and significant impact on SMEs' profits in Nigeria. According to the study's findings, it was empirically proven that competitive strategies are excellent indicators of the financial success of SMEs in Nigeria. The study recommended, among other things, that SMEs owners and managers prioritize investing in competitive strategies, especially by establishing connections with suppliers, service providers, and other auxiliary institutions because this will help them gain competitive advantage and increase their profits compared to other SMEs competitors who do not have competitive strategies.