INTRODUCTION

Small and Medium enterprises (SMEs) plays a key role in driving economic growth, innovation, and job creation worldwide. According to Ibitomi, et al., (2024), SMEs are independently owned businesses, characterized by small size, limited resources, and flexible structures. Globally, SMEs account for 90% of businesses and over 50% of employment (World Bank, 2024). In emerging economies, SMEs contributes up to 40% of Gross Domestic Product (GDP), a figure that rises when informal enterprises are included. In Nigeria, SMEs generates over 50% of industrial employment and contributes over 48% to GDP (SMEDAN, 2022). Despite these significant contributions, SMEs in Nigeria are experiencing a decline in performance.

Challenges such as inflation, currency depreciation, and rising costs hinder SMEs’ operations. PricewaterhouseCoopers (2024) reported that 67% of SMEs in Nigeria experienced declining demand due to high product costs, low consumer purchasing power, and changing preferences. Inflationary pressures, which peaked at 28.92% in December 2023, combined with energy and logistics costs, further strain SMEs. These factors erode their operational performance, Thus Nigerian SMEs faced resource constraints, structural inefficiencies, and limited access to finance, hinders their ability to optimize processes and deliver quality services. These operational inefficiencies reduce SMEs’ capacity to adapt to market changes and scale their operations, which ultimately limits their economic potentiality.

Entrepreneurial skills, are critical in addressing these challenges. Entrepreneurial skills encompass practical abilities such as financial management, decision-making, problem-solving, and strategic planning. Labo, et al., (2024) opined that entrepreneurs with strong operational competencies are better equipped to navigate economic volatility and improve operational outcomes. Entrepreneurs with financial and strategic skills can implement cos t-saving measures, optimize resource use, and adopt innovative practices that enhance operational efficiency.

However, many Nigerian SMEs lack access to formal entrepreneurial training, leaving business owners with limited skills in crucial areas like cash flow management, cost reduction, and market expansion. This skills gap leads to sub optimal decisions and inefficiencies. For example, entrepreneurs with inadequate supply chain management skills may struggle with supplier negotiations, inventory control, and cost management, resulting in increased operational costs and reduced productivity. Moreover, entrepreneurial skills influence SMEs’ adaptability to economic challenges. Entrepreneurs with strong competencies can respond effectively to rising production costs, low consumer demand, and inflationary pressures. Without these skills, such as SMEs face heightened difficulty in overcoming external challenges, leading to operational inefficiencies and threatening their sustainability.

Studies such as (Umoh, et al., (2020) and Nazir, et al., (2023) have examined SMEs performance in Nigeria, limited research has focused specifically on entrepreneurial skills as a key determinant of operational performance in Sokoto State. However, those studies have not addressed the unique impact of entrepreneurial skills in Sokoto State. Additionally, existing studies often focus on fragmented frameworks, isolating competencies like entrepreneurial characteristics and knowledge without integrating practical skills. For instance, studies by Oladele and Ojo (2020) and Olanrewaju (2021) emphasized entrepreneurial characteristics and knowledge but overlooked skills. Similarly, Oyebamiji and Ogunnaike (2021) combined entrepreneurial skills, knowledge, and motivation but did not isolate skills as a central focus.

This study seeks to address these gaps by examining the effect of entrepreneurial competencies on the operational performance of SMEs in Sokoto State with particular emphasis on entrepreneurial skills. The paper aimed at identifying practical strategies for enhancing SMEs resilience, optimizing resource use, and driving growth. By focusing on entrepreneurial skills, this study will provide actionable information to address operational inefficiencies and improve SMEs’ performance, enabling them to better adapt to economic challenges and fulfill their potential as drivers of National, regional economic development of the world.

2.1 CONCEPTUAL REVIEW

2.1.1 Concept of Performance

Performance is multifaceted and complex, it is described as the extent to which enterprises achieve predetermined objectives, incorporating qualitative and quantitative dimensions such as accuracy, cost-effectiveness, and timeliness (Kalmuk & Acar, 2015). Armstrong (2014) opined that performance is a strategic approach to organizational success, achieved by enhancing employee and enterprise capabilities. SMEs performance entails achieving output targets, meeting market demands, delivering quality products or services, and attaining profit goals (Ngatno et al., 2014). It also reflects an enterprise's ability to fulfill its mission, sustain long-term operations, and maintain a competitive edge (Aminu & Shariff, 2014). Umoh, et al., (2020) stressed that performance measures an enterprise's effectiveness and efficiency in achieving managerial objectives within a set timeframe. Thus, operational performance is a critical dimension of SMEs performance, as it assesses how effectively an organization utilizes resources to produce goods or services (Neely et al.,)

2.1.2 Concept of Entrepreneurial Skills

Entrepreneurial skills are essential competencies that enable individuals to identify opportunities, develop innovative solutions, and manage businesses effectively. These skills range from technical and financial expertise to interpersonal and strategic thinking abilities, significantly impacting the performance and growth of SMEs. Kourilsky and Walstad (1998) categorize entrepreneurial skills into basic skills, such as problem-solving, critical thinking, and communication, which are vital for engaging stakeholders and addressing challenges in entrepreneurship.

Advanced entrepreneurial skills, such as strategic planning, financial management, and market analysis, are critical for resource management and achieving competitive advantage (Kuratko & Hodgetts, 2004). Entrepreneurs with advanced skills can adapt to market dynamics and innovate in response to emerging opportunities and threats. Soft skills also play a vital role, with Goleman (1998) highlighting the importance of emotional intelligence self-awareness, empathy, and social skills that enable entrepreneurs to build relationships, lead teams, and manage interpersonal dynamics effectively and efficiently.

2.2 Empirical Review

This section presents a review of relevant studies, arranged chronologically to further explain the effect of entrepreneurial competencies on the operational performance of SMEs in Sokoto State.

Labo, et al., (2024) examined the impact of entrepreneurial competencies on SMEs performance in Yobe State, Nigeria. Primary data was sourced and collected via structured questionnaires analyzed using simple percentages and presented using graphs. The data was further estimated using the ordered probity regression technique. The study shows a robust foundation of entrepreneurial skills and decision-making is essential for small businesses to manage resource constraints effectively and remain resilient in dynamic economic environments. These findings collectively highlight the crucial role of entrepreneurial competencies in enhancing small and medium-sized enterprises' capacity to thrive, making it a key area for improving small and medium-sized enterprises performance in states like Sokoto State, Nigeria. Additionally, the study limited measurement of entrepreneurial competencies to risk-taking and networking competencies. This narrow approach fails to capture the multifaceted nature of entrepreneurial competencies, potentially overlooking key factors that influence small and medium scale enterprises performance such entrepreneurial skills, entrepreneurial characteristics, entrepreneurial motivation and entrepreneurial knowledge. Their study however, focused primarily on risk-taking and networking, neglecting other critical entrepreneurial skills such as strategic thinking, leadership, and operational efficiency. This narrow scope limits the generalizability of their findings, particularly to other regions like Sokoto State, where unique socio-economic factors may influence the effectiveness of entrepreneurial skills.

Harini, et al., (2023) analyzed the influence of entrepreneurial skills and e-commerce, which mediate the factors of technology readiness, top management support, and competitive pressure, on SMEs performance. The partial least squares structural equation modeling (PLS-SEM) was applied to estimate the research model on data from 520 respondents who actively use e-commerce in their business activities in Jakarta, Indonesia. Data were obtained by distributing questionnaires directly to SMEs. The results showed that entrepreneurial skills and e-commerce adoption positively affect SMEs performance. Furthermore, technology readiness, top management support, and competitive pressure positively affect e-commerce adoption and have implications for improving SME performance. Finally, this paper provides recommendations for SMEs managers and practitioners to improve business performance: e.g., they should enhance their entrepreneurial skills and increase e-commerce adoption for operational efficiency. The study overlooked the important measures of entrepreneurial competencies and focused only on entrepreneurial skills which might not reveal the real happenings or provide real solutions on the SMEs performance.

Negeri, et al., (2023) analyzed the effects of entrepreneurial skill and entrepreneurial motivation on Business performance, with mediating role of strategic leadership, taking selected SME Sectors in Guji Zone Oromia regional state, Ethiopia as a case study. The study employed a quantitative research design method by using surveys questionnaire to collect data. The study was employed a Quantitative research design method by using surveys questionnaire to collect data. A total of 382 respondents was selected as sample size. Estimating the total population as 2,322 owners and job opportunity creation and skill office leaders in 5 towns, the sample size 382 were determined using Yamane (1967). Data was analyzed by Classical Linear Regression Model. Result shows that entrepreneurial skill and entrepreneurial motivation positively affect business performance, with strategic leadership playing a mediating role in the SME sector of Ethiopia.

Macedo, et al., (2020) studied the relationship between entrepreneurial skills and MSMEs (Micro Small and Medium Enterprises) performance. A quantitative and descriptive research was conducted, operationalized through a survey with 47 MSMEs entrepreneurs. Findings showed that most responding entrepreneurs seek opportunities, take calculated risks, and often demand quality and efficiency in their activities within the company. It can also be noted that they always pointed to being persistent, committed and seeking information. They also demonstrated that they often set goals, plan and monitor, maintain contact with their networks, are independent and self-confident; the majority (60.4%) are in high sales growth, 14.6% found to be very profitable and 68.7% have medium to high profitability, 68.8% of them have good market share - so, companies show a positive perception of performance; it was possible to verify that there is a relationship between entrepreneurial skills and the performance of MSMEs.

Khamis and Gumawa (2020). Investigates the effect of entrepreneurial skills on SMEs performance among owners/managers registered businesses in Sabon Gari Market Kano, Nigeria. Descriptive survey research design was used while a sample size of one hundred and seventy-two (172) business owners/managers were drawn through the use of Yamane (1967) formula for sample size determination out of three hundred and three (303) owners/managers registered businesses in Sabon Gari Market, Kano, which constituted the study population. Probability sampling technique was used which involves simple random sampling. Closed-ended questionnaire served as a data collection tool for the study while regression analysis was used to analyse the collected data through Statistical Package for Social Science (SPSS) version 21. Face validity and reliability test (Cronbach’s Alpha) were conducted. The findings indicate that entrepreneurial skills have significant effect on SMEs performance; it also shows that a significant relationship exists between entrepreneurial skills and SMEs performance. The study recommends that business owners and managers should focus on improving entrepreneurship skills in order to improve the performance of small and medium scale enterprises in the area. The study was well conducted but only focused on a particular market in Kano state not the whole Kano state. Based on the review, the study hypothesized as follows: Entrepreneurial Skills have no significant effects on the perceived operational performance of SMEs in Sokoto State.

2.3 Theoretical Framework

The study adopts Human Capital Theory as its theoretical framework. The theory was selected because of its relevant to the study as it will help to examine how entrepreneurial competencies help in improving operational performance of SMEs. The theory was propounded by Gary Becker in 1964, Human Capital Theory emphasizes that individuals' knowledge, skills, and experiences significantly enhance productivity and efficiency. Investment in education and training improves entrepreneurial capabilities, leading to better business performance. This theory assumes that entrepreneurs maximize productivity and earnings through education and skill development, with specialized skills directly correlating to improved business outcomes. In the context of this study, Human Capital Theory underpins the critical role of entrepreneurial skills in driving the operational efficiency of SMEs in Sokoto State. It underscores the need for continuous learning and skills development to enhance entrepreneurial competencies, which are vital for achieving business success in resource-constrained environments like Sokoto State, Nigeria.

3. METHODOLOGY

This study adopts a quantitative survey design, allowing for the collection of data from respondents using structured questionnaires. The questionnaire was based on five likert scale. It was adopted because of its suitability in examining the effect of entrepreneurial competencies on the operational performance of SMEs in Sokoto State. The design will enable accurate descriptions necessary for policy decisions. The population of the study comprises 3552 SMEs owner-managers registered with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) Sokoto State. Sokoto Metropolis was chosen due to its status as a commercial hub with a growing concentration of SMEs experiencing performance challenges. The study spans various sectors, including manufacturing, services, wholesale and retail, ensuring broader insights. Using Krejcie and Morgan’s (1970) table, a sample size of 346 was determined as the appropriate sample size of the study. A stratified simple random sampling technique was used to sample respondents of the study.

Primary data were collected using structured questionnaires based on five likert scale, featuring closed-ended questions for easy completion and analysis. The questionnaire design ensures clarity and relevance, enabling respondents to provide accurate responses at their convenience. Data were analyzed using descriptive and inferential statistics, while linear regression analysis was used to test the hypotheses of the study. Hypotheses was tested at a 5% significance level, with decisions based on whether calculated values exceed critical values, all this was done with the help of with the help of SPSS version 26. This methodological approach ensures reliable and actionable findings on the effect of entrepreneurial competencies on the operational performance of SMEs in Sokoto State The study employs the following model to empirically test the formulated hypotheses of the study as adapted from Nurudeen, et al., (2021).

OE_it =β₀ + β₁ES_it + ɛ_it

The model above estimates the direct relationship between the independent variable-entrepreneurial competencies and SMEs operational performance measured by operational efficiency as adapted from Nurudeen, et al., (2021).

Where,

OE= Operational performance

β= Regression constant

ES = Entrepreneurial Skills

ɛ= random error term that takes care of the effects of other factors which are not fixed in the model, on dependent variable.

i = Firm Subscript

t = Year Subscript

β1 = Regression coefficient associated with independent variables.

4. RESULT AND DISCUSSION OF FINDINGS

This section presents the result and the analysis of data obtained from the regression analysis out of 346 questionnaires distributed to the sample respondents 342 were returned. The analysis and result presentation were based on the 342 returned questionnaires.

The analysis was based on hypothesis formulated; Entrepreneurial Skills have no significant effects on the perceived operational performance of SMEs in Sokoto State.

Table 1: Response Rate Analysis

Sources: Researcher Output 2025

Table 1 shows that 346 questionnaires were distributed, 342 returned (98.84% response rate) and 342 were valid. According to Sekaran (2003), a 30% response rate is adequate, making this study's rate appropriate for analysis. The high response rate was achieved through follow-ups to ensure proper completion and return of questionnaires.

Table 2: Demographic Characteristics of Respondents

Source: Field Survey, 2025

Table 2 shows 18.7% of respondents were aged 20–29, 25.1% were 30–39, 32.2% were 40–49, and 24.0% were 50 and above, while in the case of gender, 65.5% were male, and 34.5% were female.

Table 3: Descriptive Statistics of Variables

Source: Field Survey, 2025

Table 3 above indicates the mean score for entrepreneurial skills is 1.5416, indicating limited entrepreneurial skills among SMEs in Sokoto metropolis, which is concerning as these skills are essential for navigating business complexities. A minimum score of 1.00 shows extremely low skills for some SMEs, while a maximum of 3.80 reflects relatively higher skills for a few. The standard deviation of 0.33305 indicates some variation. Factors like lack of training, limited resources, and inadequate support contribute to this, emphasizing the need for targeted interventions such as training and mentorship. Similarly, the mean score for operational efficiency is 1.4907, reflecting relatively low perceived performance among SMEs, critical for business survival and growth. With a minimum score of 1.00 and a maximum of 3.00, variation exists as shown by a standard deviation of 0.27087. Inefficiencies in processes, resource constraints, and inadequate support call for tailored interventions to enhance operational performance.

Table 4: Regression Analysis

Source: SPSS Output, 2025

Hypothesis Testing

H_O1: Entrepreneurial Skills have no significant effect on perceived operational performance of SMEs in Sokoto Metropolis.

The regression analysis reveals that entrepreneurial skills have a significant positive effect on operational performance (β = 0.295, t = 2.368, Sig. = 0.019). This suggests that as entrepreneurial skills increase, operational performance also increases. Therefore, HO1 is rejected, indicating that entrepreneurial skills have a significant positive effect on operational performance. The R² suggests that entrepreneurial skills is responsible for about 36 percent changes in the entrepreneurial competencies of SMEs owners/managers in Sokoto metropolis. The findings align with existing literature, such as the work of Harini, et al., (2023), Negeri, et al., (2023), and Amrullah, et al., (2023). Consequently, the rejection of the hypothesis underscores the importance of investing in skills development programs for entrepreneurs, which can ultimately enhance their firms’ capacity to meet market demands efficiently and effectively.

5. CONCLUSION AND RECOMMENDATIONS

The study find out that entrepreneurial skills have a significant positive effect on the perceived operational performance of SMEs in Sokoto metropolis. With 36% of the variation in operational performance attributed to entrepreneurial skills, the findings emphasize the critical role of skill development in enhancing business performance. The result aligns with prior studies, underscoring the necessity of fostering entrepreneurial competencies to drive operational performance. The study recommends that SMEs in Sokoto metropolis should prioritize entrepreneurial skill development through targeted training programs, workshops, and mentorship initiatives. Policymakers and stakeholders at all levels should collaborate to provide accessible and affordable capacity-building opportunities to empower entrepreneurs, thereby improving their operational performance and ensuring sustainable business growth.

REFERENCES

• Aminu, I. M., & Shariff, M. N. M. (2014). Determinants of SMEs performance in Nigeria: A pilot study. Mediterranean Journal of Social Sciences, 5(7), 59-65. https://doi.org/10.5901/mjss.2014.v5n7p59
• Amrullah, W., Mulyana, A., & Sutisna, S. (2023). The Influence of Entrepreneurial Orientation and Skills on the Performance of SMEs in the Food and Beverage Sector. caffolding: Jurnal Pendidikan Islam dan Multikulturalisme. https://doi.org/10.37680/scaffolding.v5i3.3858
• Eze, U. C., Nweze, N. J., & Ogbonna, E. C. (2023). Operational efficiency and resource utilization among small and medium enterprises in Nigeria. International Journal of Business and Management, 18(2), 101-112.
• Goleman, D. (1998). Working with emotional intelligence. Bantam.
• Harini, S., Pranitasari, D., Said, M., & Endri, E. (2023). Determinants of SME performance: Evidence from Indonesia. Problems and Perspectives in Management. https://doi.org/10.21511/ppm.21(1).2023.40
• https://www.worldbank.org/en/topic/smefinance#:~:text=SMEs%20account%20for%20the%20majority,(GDP)%20in%20emerging%20economies.
• Khamis, M., & Gumawa, A. (2020). Effect of entrepreneurial skills on SMEs performance: A study of registered businesses operating in Sabon Gari Market, Kano. https://doi.org/10.46654/ij.24889849.s6105
• Kourilsky, M. L., & Walstad, W. B. (1998). Entrepreneurship and female youth: Knowledge, attitudes, and the entrepreneurial process. Journal of Business Venturing, 14(1), 49-62.
• Kuratko, D. F. (2016). Entrepreneurship: Theory, process, practice (10th ed.). Cengage Learning.
• Labo, A. H., Ango, Y. I., & Jimoh, N. (2024). Effect of entrepreneurial competencies on performance of small and medium scale enterprises in yobe state, Nigeria. Jalingo Journal of Social and Management Sciences, 5(3), 297-308.
• Macedo, K., Hahn, I., Bianchi, J., & Ogoshi, R. (2020). Entrepreneurial skills and its relationship with MSMEs performance. Journal of Economics, 13, 1408-1422. https://doi.org/10.5902/1983465945216
• Nazir, M., Khan, R., & Khan, M. (2023). Identifying prosperity characteristics in small and medium-sized enterprises of Pakistan: firm, strategy and characteristics of entrepreneurs. Journal of Asia Business Studies. https://doi.org/10.1108/jabs-09-2022-0309.
• Neely, A., Gregory, M., & Platts, K. (2005). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 25(12), 1228-1263.
• Negeri, D., Wakijira, G., & Kant, S. (2023). Meta-analysis of entrepreneurial skill and entrepreneurial motivation on business performance: Mediating role of strategic leadership in the SME sector of Ethiopia. International Journal of Marketing and Digital Creative, 1(1), 123-143. https://doi.org/10.31098/ijmadic.v1i1.1435
• Oladele, K. & Ojo, O. (2020). The impact of entrepreneurial orientation on business performance in Nigeria. International Journal of Business and Management, 15(10), 1-12.
• Olanrewaju, O. T. (2021). Entrepreneurial characteristics and small business success in Nigeria. D. Dissertation, University of Ibadan.
• Oyebamiji, O. T., & Ogunnaike, O. O. (2021). Entrepreneurial knowledge, skills, and motivation: A study of Nigerian youths. Journal of Small Business and Entrepreneurship, 33(2), 1-20.
• Pinho, J. C., & Ferreira, J. (2014). The impact of entrepreneurial skills on business performance: Evidence from Portuguese SMEs. Journal of Small Business Management, 52(4), 741-757.
• Pratikto, H., Winarno, A., & Restuningdiah, N. (2023). The Role of Entrepreneurial Competencies: Successful Key SMEs a Literature Review. International Journal of Professional Business Review. https://doi.org/10.26668/businessreview/2023.v8i7.1955.
• SMEDAN (2020). National Survey on Micro, Small and Medium Enterprises in Nigeria. Small and Medium Enterprises Development Agency of Nigeria. Retrieved from https://www.smedan.gov.ng
• World Bank. (2024). Nigeria: Economic Update. Retrieved from https://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-update https://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-update