The moderating effect of risk taking on the relationship between strategic management practices and small and medium enterprises growth

Abstract

Small and Medium Enterprises (SMEs) in Nigeria have been proven to be essential drivers of advancing the nation’s economy. Despite the evident importance of strategic management practices (SMP) in enhancing performance in volatile business environments such as Lagos State, many SMEs continue to experience a high failure rate. Therefore, this study investigates the moderating effect of entrepreneurial risk-taking on the relationship between strategic management practices and SME growth in Lagos, Nigeria. The study was guided by the resource-based view and perceived risk theory while also employing a quantitative cross-sectional research design to gather data via a structured online questionnaire from 262 owners and managers of registered SMEs. The analysis of the data was done using structural equation modeling to test direct and moderating relationships among the variables. The findings of the study revealed that although there is a significant positive relationship between SMPs and SME growth, entrepreneurial risk-taking did not have a direct effect on SME growth. Hence, the study concludes that SMP is indispensable for SME growth and recommends that owners and managers should focus on effectively implementing strategic plans in a disciplined manner while ensuring that risk-taking is calculated in a strategic manner.