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PROJECT TOPIC- EFFECTS OF CREATIVITY AND INNOVATION ON THE ENTREPRENEURIAL PERFORMANCE OF FAMILY BUSINESS (A STUDY OF SELECTED FAMILY BUSINESSES IN LAGOS STATE)

PROJECT TOPIC- EFFECTS OF CREATIVITY AND INNOVATION ON THE ENTREPRENEURIAL PERFORMANCE OF FAMILY BUSINESS (A STUDY OF SELECTED FAMILY BUSINESSES IN LAGOS STATE)

 

ABSTRACT

This research study examined the effects of creativity and innovation on the Entrepreneurial performance of family businesses. The objective of the research was to examine the effects of creativity and innovation on entrepreneurial performance of family business. Both primary and secondary data were used for the data gathered. The survey research method was used through the distribution of 200 questionnaires to 20 family businesses in the Lagos metropolis. The family businesses used for this study included the following Techoquip Limited, Deorenik Limited, Ajoke Stores Limited, Eagles Path Limited, Olaolu Trading Stores, Obosi & Co Limited, Eleganza, Bode Best & Co Limited, AA Shittu & Co Limited, Elizade Nigeria Limited, Ekenedilichukwu Transport, CN Okoli Motors, Diya Fatimileyin & Co Limited, Jide Taiwo & Co Limited, Howard Daffinone Consulting, Rotimi Williams Firm, BraithWhyte Group, and Emmalesson Group, Ibru Group of Companies, and OBAT petroleum group. ANOVA test statistics was used to test the three hypotheses of the research. In analysis of the data gathered, it was found that creativity and innovation through product quality, new technology, and new product development significantly affect the performance of family businesses. The study recommends that family businesses should engage more on technology in improving the quality of their product so as to sustain their organisation’s position in the face of competition.

CHAPTER ONE
INTRODUCTION

1.0 Background to the Study

The Nigerian economy thrives on proceeds from oil and contributions of the private sector. Family businesses constitute a larger part of the private sector. Thus they contribute a significant amount to the national income. Nigeria was one of the richest 50 countries in the early 1970s but has retrogressed to become one of the 25 poorest countries at the threshold of the 21st century. It is ironic that Nigeria is one of the largest exporters of crude-oil and at the same time inhibits the third largest number of poor people after China and India (Igbuzor, 2006). Adogamhe (2007) claimed that despite Nigeria’s vast oil wealth and abundant human resources, fluctuating oil prices, endemic corruption and mismanagement of resources have undermined economic progress and made the majority of the population live in abysmal poverty.
Thus, given this present state of the economy of Nigeria, there is the need for the promotion and encouragement of entrepreneurial activities and establishments, such as family businesses among others, which assist in growing and increasing the national income of the country. Despite the availability of several other kinds of businesses, the focus of this study was on family businesses. According to Oketola and Nnodim (2011), family business was defined as a business in which one or more members of one or more families have a significant ownership interest and commitments towards the business’ overall well being.
Kurato and Richard (2004) opined that, today, most of the businesses we see are family businesses and these businesses have been noted to account for the largest percentage of the businesses in many nations. Family firms are essential for the economic growth and development through new business start-ups and growth of existing family firms (Kellermanns, Eddleston, Barnett, Pearson, 2008). Family firms that engage in the innovative, proactive, and risk-taking behaviors that characterized firm level entrepreneurship are major contributors to the economic development and growth in USA and world economies (Zahra, Hayton, and Salvato, 2004). Family businesses are essential in enhancing economic development and growth by creating and funding new businesses as well as growing existing firms (Kellermanns, Eddleston, Barnett, Pearson, 2008). The impact of family firms on the development and growth of an economy cannot be overemphasized as it helps to reduce unemployment rate by creating job opportunity and contribution to government revenue in form of taxes.
However family owned business, regardless of size, face significant challenges of continuity, longevity, and success with many of the business families failing to sustain their firms beyond the first generation. (Oketola and Nnodim, 2011). In Nigeria, the story of the growth of family owned businesses is generally considered dramatic because of the amount of pitfalls that are faced by these firms before they go on to be successful. While some of these family businesses have become successful, many have also failed while others are simply basking in the shadow of their former selves.
Creativity according to Pfieffer (1979) is the ability to realize creative product. Ignacio defined creativity as a piece of work which is first to a significant extent new, original, and unique and second shows a high degree of success in its field. Kuczmarski, Middlebrooks, and Swaddling (2000) suggested that innovation brings a new perceived benefit or value to a customer, employee, or shareholder. The new perceived benefit ranges from minimal to massive and may be functional, psychological, emotional, or financial.

For example, a process innovation could bring a time-saving benefit to employees.
According to Adair and Thomas (2004) to innovate is to introduce something new – an idea, method or device – it is a combination of processes: generating new ideas and the following implementation. Thus creativity and innovation brings into the business place new ideas and ways of doing things which in the long run leads to efficiency and effectiveness in production process or service rendering as the case may be and in most cases the development of new products as well as the packaging and rebranding of old products. Because of the constant failure of family business and how creativity and innovation can help to solve these challenges, this research focused to examine the effect of creativity and innovation on the entrepreneurial performance of family business.

PROJECT TOPIC- EFFECTS OF CREATIVITY AND INNOVATION ON THE ENTREPRENEURIAL PERFORMANCE OF FAMILY BUSINESS (A STUDY OF SELECTED FAMILY BUSINESSES IN LAGOS STATE)

1.1 Statement of the Research Problem

The concept of family business has been in existence for a long time now. Esuh, Mohd, and Adebayo (2011) stated that family business has been in existence a long time ago and has been known to water economy most especially during the dry days. Bird, Welsch, Astrachan, and Pistrui (2002) posited that family business has been the strength and the power of different nations since the ancient economies. Ramona, Hoy, Poutziouris, and Steier (2008) asserted that family business is an emerging aspect of entrepreneurship which has evolved over the decades and still in its developing stage. Past studies on family businesses has concentrated on diverse perspectives.

Hoy and Verser (1994, cited by Esuh, Mohd, and Adebayo, 2011) provided six general perspectives which comprises of leadership, culture, boards of directors, life cycles, strategic management processes, and ethics and value. Focusing on family business continuity, a lot of research has been done on the succession process of family businesses as it relates to continuity. Stalk and Foley (2009) suggested the training and screening of the members of the next generation of a family business to ensure only committed and qualified relatives join the business, devising strategies to grow the business and creating responsibilities for additional family employees, and the business should minimize the time employees spend working for immediate relatives and assign an experienced non-family mentor to each younger family member to avoid the traps that destroy family businesses.

Esuh, Mohd, and Adebayo (2011) were of the opinion that three factors which are founder, successor, and environment affect succession in family businesses. According to Esuh, Mohd, and Adebayo, “the presence of these three key factors reflects a true succession which would ensure family business continuity. Thus, a succession without any of these key factors could jeopardize the future and continuity of family business. The key factors would serve as essential ingredients to the true succession as well as to family business continuity.” Lee, Lim and Lim (2008) examined how the degree of idiosyncrasy of a family business and the ability of the family’s offspring affect succession. They proposed that the likelihood the successor to a family business will be an offspring will increase with business idiosyncrasy and that business idiosyncrasy will interact with the competency of both the offspring and agent to affect successor choice.
Despite the numerous studies that exist on family businesses, there are still many evident cases of family business failure. This shows that a gap still exist in literature on the effective execution of family business for greater impact to the economy. Hence this study examined the effect of creativity and innovation on the entrepreneurial performance of family business.

1.2 Objectives of the Study

The general objective of the study was to examine effects of creativity and innovation on entrepreneurial performance of family business. The specific objectives of the study were as follow:
i. To determine the effect of high quality product on the profitability of family business.
ii. To determine the effect of introduction of new technology on the profitability of family business.
iii. To determine the effect of new product development on the sales turnover of family business.

1.3 Research Questions

To achieve the above mentioned objectives, the following questions were addressed

PROJECT TOPIC- EFFECTS OF CREATIVITY AND INNOVATION ON THE ENTREPRENEURIAL PERFORMANCE OF FAMILY BUSINESS (A STUDY OF SELECTED FAMILY BUSINESSES IN LAGOS STATE)

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