EVALUATON ON IMPACT OF DIGITAL ENTREPRENEURSHIP ON SMALL BUSINESS GROWTH IN NIGERIA

CHAPTER ONE INTRODUCTION 1.1 Background of the study Globally, entrepreneurship has evolved into a powerful force for wealth creation and economic development across many economies. It is a dynamic and multifaceted process that is driven by individuals who assume substantial risks in terms of equity, time, and career commitment to generate value through innovative products or services (Wu, Zhu, & Qu, 2024). While the product or service itself may not always be novel, entrepreneurs infuse value by securing and efficiently allocating essential skills, networks, and resources to ensure business success. More importantly, entrepreneurship is widely recognized as the strategic application of energy, creativity, and innovation to initiate, nurture, and sustain business enterprises in an increasingly competitive global market. According to Judijanto et al. (2024), these enterprises provide a crucial platform for enhancing technological and entrepreneurial capacities, stimulating employment opportunities, and ensuring a more equitable distribution of wealth across different social strata. Furthermore, SMEs facilitate the transition from agriculture-based economies to industrialized economies by fostering value-chain linkages, encouraging technological diffusion, and promoting sustainable livelihoods. More specifically, they require strategic management of resources, sound financial planning, and strong customer relationship management to ensure long-term business sustainability, scalability, and profitability. Notably, in Nigeria, entrepreneurship has gained widespread recognition as a fundamental catalyst for economic transformation, social mobility, and national development. Entrepreneurs play a pivotal role in identifying and seizing opportunities, converting them into viable business ventures, and investing resources such as capital, skills, and labor to bring them to fruition (Orrensalo, Brush, & Nikou, 2022). These entrepreneurial activities not only contribute to economic diversification by reducing reliance on oil revenues but also serve as an effective mechanism for tackling unemployment and fostering self-reliance among individuals and communities. Consequently, small and medium-sized enterprises (SMEs) have emerged as indispensable engines of socio-economic development, driving industrialization, income generation, and innovation. Progressively, the digital revolution has dramatically reshaped the entrepreneurial landscape, redefining business models, operational frameworks, and market dynamics. Traditional business models, which were once reliant on physical interactions and localized markets, have now expanded into digital spaces, unlocking unprecedented opportunities for entrepreneurs in both developed and emerging economies. Jovanović, Marković, and Berezljev (2024) highlight that the advent of digital technologies, including e-commerce platforms, social media marketing, cloud computing, and financial technology (FinTech), has fundamentally revolutionized business processes, improving efficiency, reducing operational costs, and enhancing customer engagement. This digital shift has significantly lowered entry barriers, allowing entrepreneurs, regardless of their geographic location, to compete in global markets with fewer financial and infrastructural constraints than ever before. Beyond that, digital entrepreneurship has become a defining feature of modern business ecosystems, enabling entrepreneurs to leverage technology to differentiate their enterprises and sustain market relevance in an increasingly digitalized world. Digitalization has revolutionized brand positioning for small and medium-sized businesses, offering cost-effective and scalable solutions to reach global audiences. Entrepreneurs now harness the power of e-commerce platforms such as Shopify and Amazon to sell products and services globally without the need for traditional brick-and-mortar establishments, thereby significantly reducing overhead costs and logistical challenges (Sadigov, 2022). Social media marketing through platforms such as Facebook, Instagram, Twitter, and TikTok allows businesses to build brand awareness, foster direct consumer engagement, and cultivate customer loyalty. Additionally, digital marketing strategies such as search engine optimization (SEO), influencer marketing, and targeted online advertising enhance business visibility, drive consumer traffic, and improve conversion rates, making it easier for businesses to expand their market reach in a highly competitive digital landscape. Undeniably, as competition intensifies, entrepreneurs must utilize advanced digital tools and platforms to enhance their market positioning and drive business innovation. Jafari-Sadeghi et al. (2021) emphasize that digital transformation enables businesses to explore and exploit new markets, optimize operational efficiency, and establish direct connections with target audiences through personalized digital engagement. With the advent of AI-driven analytics and big data, small businesses now have access to valuable insights that facilitate data-driven decision-making, predictive analytics, and targeted marketing strategies, ultimately enhancing their profitability and competitive edge. Investing in automation tools such as customer relationship management (CRM) systems, AI-powered chatbots, cloud-based accounting software, and cybersecurity solutions can significantly enhance operational efficiency, streamline customer service, and optimize business processes. Moreover, collaboration with digital influencers, participation in online marketplaces, integration into the gig economy, and engagement in digital mentorship programs further strengthen business credibility, foster brand trust, and facilitate business expansion in both domestic and international markets. Thus, successful digital entrepreneurship requires continuous learning, adaptation, and the strategic deployment of digital tools and resources. Tukhtaraliev (2024) argued that entrepreneurs in the face of digitalization must prioritize digital literacy, technological upskilling, and strategic technology adoption to maintain their competitive advantage in an ever-evolving digital business environment . 1.2 Statement of the problem No doubt, entrepreneurship has undergone a transformative shift with the rise of digital tools, fundamentally reshaping how small businesses operate, compete, and scale. Digital platforms enable businesses to streamline operations, enhance data management, and drive innovation, ultimately fostering market differentiation and competitive advantage (Jafari‐Sadeghi, García-Pérez, Candelo, & Couturier, 2021). Additionally, digital entrepreneurship reduces traditional barriers to entry, empowering individuals with limited financial resources to establish and sustain their ventures, thereby promoting inclusive economic development across diverse demographics and regions (Irawan, 2021). Existing literature has extensively explored the role of digitalization in enhancing firm performance. Studies show that adopting digital technologies improves operational efficiency, task management, and market orientation through data-driven consumer insights (Fossen & Sorgner, 2019). Moreover, digital platforms have been instrumental in SME internationalization, with global marketplaces like Alibaba serving as catalysts for business expansion (Dana, Salamzadeh, Mortazavi, & Hadizadeh, 2022). However, while digital transformation presents immense opportunities, its success requires substantial investment, strategic implementation, and an enabling business environment—factors that remain largely unaddressed in the Nigerian SME landscape (Fuerst, Sanchez-Dominguez, & Rodriguez-Montes, 2023). Bizarrely, amidst the many potential digital tools offer, many small and medium-sized enterprises (SMEs) in Nigeria face significant challenges in effectively adopting digital entrepreneurship, limiting their ability to thrive in an increasingly dynamic and competitive business environment. A major barrier is the inefficient integration of digital platforms, which prevents businesses from fully leveraging technological advancements for operational efficiency and market expansion (Daraojimba et al., 2024). Research highlights inadequate digital infrastructure, low digital literacy, and cybersecurity concerns as critical impediments to digital adoption among Nigerian SMEs (Himki, Ramadhan, Durachman, & Pramono, 2022). Furthermore, a lack of strategic commitment to digital transformation, compounded by high costs of implementation and insufficient government support, continues to hinder sustainable growth and digital competitiveness (Cenamor, Parida, & Wincent, 2019). Despite the growing relevance of digital entrepreneurship, much of the existing research focuses on large corporations, leaving a critical gap in understanding how Nigerian SMEs navigate digital transformation for sustainable growth. The limited empirical studies on this subject underscore the need for a context-specific investigation into the role of digital entrepreneurship in driving small business success in Nigeria. Against this backdrop, this study seeks to examine the impact of digital entrepreneurship on the growth and sustainability of SMEs in Nigeria. 1.3 Purpose of the Study The purpose of the study is focused on the Impact of Digital Entrepreneurship on Small Business Growth. Specifically the study seeks to: i. Evaluate the digital tools adopted to aid the performance of small businesses in Nigeria. ii. Evaluate the impact of digital entrepreneurship on the operational efficiency of small businesses in Nigeria. iii. Evaluate the role of digital entrepreneurship in expanding market visibility of small businesses in Nigeria. iv. Evaluate the impact of digital entrepreneurship on the sustainability of small businesses in Nigeria. 1.4 Research Questions i. What are the digital tools adopted to aid the performance of small businesses in Nigeria? ii. How does digital entrepreneurship impact the operational efficiency of small businesses in Nigeria? iii. What role does digital entrepreneurship play in expanding the market visibility of small businesses in Nigeria? iv. How does digital entrepreneurship influence the sustainability of small businesses in Nigeria? 1.5 Research Hypotheses H₀1: Digital entrepreneurship has no significant impact on the operational efficiency of small businesses in Nigeria H₀2: Digital entrepreneurship has no significant impact on the operational efficiency of small businesses in Nigeria. H₀3: Digital entrepreneurship does not significantly influence the sustainability of small businesses in Nigeria. 1.6 Significance of the study Practically, the findings of this study will be highly significant to entrepreneurs, particularly small business owners, as it provides valuable insights into the role of digital entrepreneurship in driving business growth. By understanding how digital tools such as e-commerce, digital marketing, financial technology (FinTech), and automation impact business operations, entrepreneurs can make informed decisions regarding technology adoption. This study will help them identify key digital strategies that enhance market expansion, operational efficiency, and competitive advantage. Furthermore, the research will highlight common barriers to digital adoption, such as infrastructure deficits and cybersecurity concerns, equipping entrepreneurs with the knowledge needed to navigate these challenges effectively and sustain business growth. For policymakers and government agencies, this study will serve as an empirical foundation for designing policies and initiatives that promote digital entrepreneurship among small businesses. Given that SMEs contribute significantly to employment and economic development, understanding their digitalization needs will enable the government to create targeted support programs such as digital literacy training, infrastructure development, and financial incentives for technology adoption. The findings will also assist regulatory bodies in formulating policies that ensure a conducive digital business environment, fostering innovation and sustainable economic growth. Additionally, the research will be valuable to financial institutions and investors, as it offers insights into the digital financing needs of small businesses. Banks, venture capitalists, and fintech companies can leverage the findings to develop tailored financial products that support digital transformation among SMEs, ultimately fostering business sustainability and economic development. Empirically, the study will also be beneficial to academia and researchers, as it fills a critical gap in the literature on digital entrepreneurship in Nigeria. While existing research has focused on digital adoption in large corporations, this study provides a contextualized analysis of how entrepreneurial SMEs utilize digital tools. This contribution will aid future research in exploring emerging trends, challenges, and best practices in digital entrepreneurship. 1.7 Scope of the study This study focuses on the impact of digital entrepreneurship on small businesses in Lagos State, Nigeria, examining key aspects such as operational efficiency, market visibility, and sustainability. The content scope includes an evaluation of digital tools adopted by small businesses, the role of digital platforms in enhancing productivity, and the influence of online marketing and e-commerce on business growth. The geographical scope is limited to Lagos State, a major commercial hub in Nigeria, known for its high concentration of small businesses and entrepreneurial activities. 1.8 Operational Definition of terms Entrepreneurship: Entrepreneurship is the process of starting and operating a new business, typically characterized by innovation, risk-taking, and the pursuit of opportunities to create value. Entrepreneurs are individuals who initiate and develop new business ventures, often with the goal of solving problems or addressing unmet needs in the market. Digital Entrepreneurship – The process of creating, managing, and growing a business by leveraging digital technologies such as e-commerce platforms, social media marketing, financial technology (FinTech), and cloud computing to enhance operations, market reach, and competitiveness. Small Business – A privately owned enterprise with limited workforce size, revenue, and market reach, typically characterized by personalized management, flexible operations, and significant contributions to local economic development. Business Growth – The measurable expansion of a business in terms of revenue, market share, customer base, workforce size, and operational capacity, often facilitated by innovation, strategic management, and technological adoption.