The Role of Human, Financial and Social Capital in the Performance of Small Businesses in Nigeria: A Second Look

Regina G. Okafor


The methodology adopted in this paper involved using a five likert scale measure to assign values to the impactof human, financial and social capital variables on a sample of 20 firms (12 manufacturing and 8 servicing), andthen applying the Kruskal-Wallis analysis test to determine whether there is significant difference in the level ofthe impact of the three independent variables on the dependent variable (firm performance). Results indicatethat two human capital variables, namely education and work experience, have a higher impact factor on bothtypes of firms relative to the impact of family background, and owners’ direct involvement. Measures offinancial capital especially willingness to borrow has greater impact on manufacturing firms than on servicingfirms. While measures of social capital especially it’s relational component has impact on both types of firms.The result of the Kruskal-Wallis analysis test suggests that the performance of small firms in Nigeria isessentially driven by all three factors (human, financial and social capital).

Keywords: Human Capital, Financial Capital, Social Capital, Performance, Small Businesses

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