X-raying Foreign Direct Investment and Innovation Capability of SMEs in Lagos State
Abstract
In the 21st century, socio-economic development has largely depends on the success of small and medium enterprises (SMEs). However, the sector has not been able to fully take advantage of FDI to enhance innovation capability of the ventures particularly in developing countries like Nigeria. The study, therefore, leverages dynamic capability theory to x-raying the influence of foreign direct investment on innovation capability of SMEs in Lagos State. A cross-sectional and random sampling techniques were employed to gather data from 382 SME owners/operators in Lagos State from the population of 8,395 out of which 365 were validly filled and returned via snowballing approach representing 95.6% response rate. The primary data were further subjected to statistical analysis using frequency, Pearson Product Moment correlation coefficient, and regression. The study found out that foreign direct investment has significant and positive effects on innovation capability of SMEs in Lagos State in the areas of idea management, service quality delivery, and competiveness. However, the findings of this study demonstrated that FDI has more effect on idea management than service quality delivery and competiveness. The study further proposes that the CEOs or managers in the space of SMEs should engage policymakers to ensure improved infrastructure and resources are in place to support FDI-SMEs intervention arrangement for the purpose of enhancing innovative ideas of the players towards global competiveness.
