Strategic Management Practices and Small and Medium Enterprises Performance Across the North Central Nigerian States: A Spatial Durbin Analysis of Cross-State Spillover Effects

Abstract

Studies of strategic management in Nigeria almost always treat the firm as a spatially isolated decision unit, so that any performance benefit a firm derives from the strategic conduct of enterprises in neighbouring localities is either ignored or absorbed into an error term. This study relaxes that assumption (find out why this should be included in the abstract). Using a survey dataset of 634 small and medium enterprises drawn from all 121 local government areas of the seven administrative units of the North Central geopolitical zone of Nigeria, the study estimates a Spatial Durbin Model of firm performance in which strategic planning intensity, environmental scanning capability, strategy implementation capability, strategic control and evaluation, and strategic leadership enter both in own-locality and in neighbour-locality form. Moran’s I of 0.640 for the performance index and a significant robust Lagrange multiplier lag statistic of 55.394 against an insignificant robust error statistic of 0.046 confirm that a spatial lag specification is warranted, and likelihood ratio tests reject both the spatial autoregressive and the spatial error restrictions. The spatial autoregressive parameter is 0.306 and significant at the one per cent level. Strategic planning intensity, strategy implementation capability and infrastructure quality generate positive and significant indirect effects of 0.615, 0.599 and 0.783 respectively, of which roughly one third crosses a state boundary. Strategic leadership behaves differently: its direct effect is positive but its indirect effect is negative at -0.430, so that its total effect is negative, a pattern consistent with competitive displacement of managerial talent between adjoining localities. Environmental scanning, strategic control and evaluation, firm size and firm age generate no significant spillover of any kind, and firm age is insignificant throughout. The findings imply that strategic management capability in the zone is partly a locational public good, and that enterprise development policy coordinated at zonal rather than state level would capture benefits that state-level programming forgoes.