Indian Journal of Industrial Relations: Economics & Social Dev.

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Employee Engagement & Financial Performance of SMEs in Lagos State, Nigeria


Affiliations
1 Associate Professor Department of Employment Relations and Human Resourc Management, University of Lagos,, Nigeria
2 Senior Lecturer, Department of Employment Relations and Human Resource Management, University of Lagos, Nigeria
     

   Subscribe/Renew Journal


This article examines employee engageme nt and f i nanci al pe rf ormance of SMEs in Lagos State, Nigeria. Data was collected through a systematic review of relevant literature and a structured questionnaire. The data obtained from the questionnaire was subjected to descriptive and inferential statistics. The result showed a significant positive relationship between employee engagement and financial performance of SMEs. Employee engagement positively correlated with the financial performance criteria such as profitability, financial strength, operating efficiency, performance stability, level of indebtedness, and ability of the enterprises to raise capital. SMEs can enhance employee engagement through the use of improved employee- management relations, regular training, teamwork, and increase in capacity utilisation rates, among others.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Ahmed, U., Beck, T., McDaniel, C. & Schropp, S. (2016), “Filling the Gap: How Technology Enables Access to Finance for Small and Medium- Sized Enterprises”, Innovations, 10(3/4): 35-48.

  • Akintimehin, O. O., Eniola, A. A., Alabi, O. J., Eluyela, D. F., Okere, W. & Ozordi, E. (2019), “Social Capital and Its Effects on Business Performance in the Nigerian Informal Sector”, Heliyon, 5: 1-13.

  • Akinyemi, F. O., Alarape, A. A. & Erinfolami, T. P. (2017), “The Impact of Socio-demographic Factors on Performance of Small and Medium Enterprises in Lagos State, Nigeria”, Ife Research Publications in Geography, 15: 107-15.

  • Ali, N. & Najman, B. (2018), “Informal Competition, Firm Productivity and Policy Reforms in Egypt”, in Ioana A. Horodnic, Peter Rodgers, Colin C. Williams & Legha Momtazian (Eds.), The Informal Economy: Exploring Drivers and Practices, Routledge, New York.

  • Amah, O. E. (2018), “Employee Engagement in Nigeria: The Role of Leaders and Boundary Variables”, South African Journal of Industrial Psychology, 44: 1-8.

  • Bakker, A. B., Demerouti, E & Verbeke, W. (2004), “Using the Job Demands– resources Model to Predict Burnout and Performance”, Human Resource Management, 43: 83–104.

  • Baumruk, R. & Gorman, B. (2006), Why Managers Are Crucial to Increasing Engagement, Melcrum Publishing. London.

  • Blau, P. (1964), Exchange and Power in Social Life, Wiley. New York.

  • Cook, K. S., Cheshire, C., Rice, E. R. W. & Na kagawa ( 201 3) , “Soc ial E xch an ge Theory”, in DeLamater, J. & Ward, A. (Eds.), Handbook of Social Psychology, Springer. Netherlands.

  • Cropanzano, R. & Mitchell, M. S. (2005), “Social Exchange Theory: An Interdisciplinary View”, Journal of Management, 31(6): 874900.

  • De-Waal, A. A. (2007), “The Characteristics of a High Performance Organization”, Business Strategy Series, 8(3): 179–85

  • Durowoju, S. T. (2017), “Impact of Technological Change on Small and Medium Enterprises Performance in Lagos State”, Economic and Environmental Studies, 4(44): 743-56.

  • Ekeh, P. (1974), Social Exchange Theory: The Two Traditions, Harvard University Press.

  • Ellis, C. M. & Sorensen, A. (2007), “Assessing Employee Engagement: The Key to Improving Productivity”, Perspectives, 15(1): 1-12.

  • Emerson, R. M. (1976), “Social Exchange Theory”, Annual Review of Sociology, 2: 335-62.

  • Galagan, P. (2015), “Employee Engagement: An Epic Failure?”, Talent Development, 69(3): 24 – 27.

  • Gonring, M. P. (2008), “Customer Loyalty and Employee Engagement: An Alignment for Value”, The Journal of Business Strategy, 29(4): 29–40.

  • Gouldner, A.W. (1960), “The Norm of Reciprocity”, American Sociological Review, 25: 161-78.

  • Grant, R. M. (2003), “Contemporary Strategy Analysis”, Blackwell Publishers.

  • Halbesleben, J. R. B. & Wheeler, A. R. (2008), “The Relative Roles of Engagement and Embeddedness in Predicting Job Performance and intention to Leave”, Work and Stress, 22: 242–56.

  • Harter, J. K., Schmidt, F. L. & Hayes, T. L. (2002), “Business-unit-Level Relationship Between Employee Satisfaction, Employee Engagement, and Business Outcomes: A Meta-Analysis”, Journal of Applied Psychology, 87: 268 – 79.

  • Homans, G. C. (1958), “Social Behavior as Exchange”, American Journal of Sociology, 63: 597-606.

  • Horodnic, A. V., Ciobanu, C. I., Williams, C. C. & Rodgers, P. (2018), “Assessing the Frequency of Informal Payments for Health Services in Lithuania” , in Ioana A.

  • Horodnic, Peter Rodgers, Colin C. Williams & Legha Momtazian (Eds.), The Informal Economy: Exploring Drivers and Practices, Routledge. New York.

  • Hsu, I. C., Lin, C. Y. Y., Lawler, J. J. & Wu, S. H. (2007), “Towards a Model of Organizational Human Capital Development: Preliminary Evidence from Taiwan”, Asia Pacific Business Review, 13: 251-75.

  • Ibiwoye, A., Mojekwu, J. & Dansu, F. (2020), “Enterprise Risk Management Practices and Survival of Small and Medium Scale Enterprises in Nigeria”, Studies in Business and Economics, 15(1): 68-82.

  • International Labor Office (2015), Small and Medium-sized Enterprises and Decent and Productive Employment Creation, International Labor Office.

  • Jnaneswar, K. (2020), “Impact of Employee Engagement on Organizational Citizenship Behavior: Evidence from Indian Retail Industry”, The Indian Journal of Industrial Relations, 55(3): 460-75.

  • Joshi, R. J. & Sodhi, J. S. (2011), “Drivers of Employee Engagement in Indian Organizations”, The Indian Journal of Industrial Relations, 47(1): 1-12.

  • Joyce, P. & Woods, A. (2001), Strategic Management: A Fresh Approach to Knowledge, Skills and Creativity, Kogan Page. London.

  • Kahn, W. A. (1990), “Psychological Conditions of Personal Engagement and Disengagement at Work”, Academy of Management Journal, 33: 692-724.

  • Kazmi, A. (2000), Business Policy and Strategic Management, Tata McGraw-Hill, New Delhi.

  • Knox, S. & Maklan, S. (2005), “Guaranty Trust Bank of Nigeria: Building a Trusted Brand in Financial Services”, Thunderbird International Business Review, 47(6): 737-55.

  • Macey, W. H., Schneider, B., Barbera, K. M. & Young, S. A. (2009), Employee Engagement: Tools for Analysis, Practice, and Competitive Advantage, Wiley-Blackwell. New Jersey.

  • Macleod, D. & Clarke, N. (2009), Engaging for Success: Enhancing Performance Through Employees’ Engagement, Department for Business, Innovation and Skills, Surrey.

  • Mayo, E. (2014), The Social Problems of an Industrial Civilization, Routledge. London.

  • McKenzie, D. (2017), “Identifying and Spurring High-growth Entrepreneurship: Experimental Evidence from a Business Plan Competition”, American Economic Review, 107(8): 2278-2307.

  • Mone, E. M. & London, M. (2010), Employee Engagement Through Effective Performance Management: A Practical Guide for Managers, Routledge. New York

  • Olukoju, A. (2017), “Gentlemanly Capitalism and Entrepreneurial Management: Formation and Rise of Nigeria’s Guaranty Trust Bank, 1990-2002", in A. Akinyoade, T. Dietz & C. Uche (Eds.), Entrepreneurship in Africa, Brill. Leiden, Netherlands.

  • Pattnaik, A. (2018), “Social Exchange Theory: Revisiting the Scaffolding of Psychological Contract”, The Indian Journal of Management, 11: 9-12.

  • Pereshybkina, A., Conde, M. E. C. & Kalyesubula, T. (2017), Industry 4.0 Scenario Planning: How Will the Industry 4.0 Transformations Affect SMEs in Germany by 2030? M.Sc. dissertation, Hochschule Furtwangen University, Germany.

  • Salanova, M., Agut, S. & Peiró, J. M. (2005) “Linking Organizational Resources and Work Engagement to Employee Performance and Customer Loyalty: The mediation of service climate”, Journal of Applied Psychology, 90(1): 17–27.

  • Sandhya, S. & Sulphey, M. M. (2019), “An Assessment of Contribution of Employee Engagement, Psychological Contract and Psychological Empowerment Towards Turnover Intentions of IT employees”, International Journal of Environment, Workplace and Employment, 5(1): 22–31

  • Sandhya, S. & Sulphey, M. M. (2020), “Influence of Empowerment, Psychological Contract and Employee Engagement on Voluntary Turnover Intentions”, International Journal of Productivity and Performance Ma nage men t, Acce sse d fr om ht t p s: // doi.org/10.1108/IJPPM-04-2019-0189

  • Schaufeli, W. B., Salanova, M., Gonzalez-Roma, V. & Bakker, A. B. (2002), “The Measurement of Engagement and Burnout: A Two Sample Confirmatory Factor Analytic Approach”. Journal of Happiness Studies, 3: 71–92.

  • Seijts, G. H. & Crim, D. (2006), “What Engages Employees the Most, or the Ten C’s of Employee Engagement”, Ivey Business Journal, 2006, (March/April): 1-5.

  • Serwanja, R. (2017), “The Effect of International Financial Reporting Standards (IFRS) on Profitability Performance of SMEs in Developing Countries: A Case of Uganda”, International Journal of Technology and Management, 2(1): 1-12.

  • Ukenna, S., Ifeoma, N., Anionwu, C. & Olise, M. C. (2010), “Effect of Investment in Human Capital Development on Organizational Performance: Empirical Examination of the Perception of Small Business Owners in Nigeria”, European Journal of Economics, Finance and Administrative Science, 26: 93–107.

  • Volti, R. (2008), An Introduction to the Sociology of Work and Occupations, Pine Forge Press. Thousand Oaks, California.

  • Vyas, V. & Jain, P. (2020), “Prioritization of Financial Performance Determinants in Indian SMEs”, Journal of Indian Business Research, 12(2): 169-90.

  • Wang, Y. (2016), “What Are the Biggest Obstacles to Growth of SMEs in Developing Countries? An Empirical Evidence from an Enterprise Survey”, Borsa Istanbul Review, 16(3): 167-76.

  • White, B. (2011), Global Engagement Report, Princeton Incorporation. Princeton, New Jersey.

  • Woodruff, C. (2018), Addressing Constraints to Small and Growing Businesses, International Growth Centre, London.

  • World Economic Forum (2015), The Future of Fintech: A Paradigm Shift in Small Business Finance, World Economic Forum. Geneva, Switzerland.

  • Wornell, E. J., Jensen, L. & Tickamyer, A. (2018), “The Role of Informal Work in the Livelihood Strategies of US Households”, in Ioana A. Horodnic, Peter Rodgers, Colin C. Williams & Legha Momtazian (Eds.), The Informal Economy: Exploring Drivers and Practices, Routledge. New York.

  • Wright, P. M. & Haggerty, J. J. (2005), “Missing Variables in Theories of Strategic HRM”, Management Review, 16(2): 162-71.

  • Xanthopoulou, D., Bakker, A. B., Demerouti, E. & Schaufeli, W. B. (2009), “Work Engagement and Financial Returns: A Diary Study on the Role of Job and Personal Resources”, Journal of Occupational and Organizational Psychology, 82: 183–200.


Abstract Views: 104

PDF Views: 0




  • Employee Engagement & Financial Performance of SMEs in Lagos State, Nigeria

Abstract Views: 104  |  PDF Views: 0

Authors

Akeem Ayofe Akinwale
Associate Professor Department of Employment Relations and Human Resourc Management, University of Lagos,, Nigeria
Paul Olusiji Ogunyomi
Senior Lecturer, Department of Employment Relations and Human Resource Management, University of Lagos, Nigeria

Abstract


This article examines employee engageme nt and f i nanci al pe rf ormance of SMEs in Lagos State, Nigeria. Data was collected through a systematic review of relevant literature and a structured questionnaire. The data obtained from the questionnaire was subjected to descriptive and inferential statistics. The result showed a significant positive relationship between employee engagement and financial performance of SMEs. Employee engagement positively correlated with the financial performance criteria such as profitability, financial strength, operating efficiency, performance stability, level of indebtedness, and ability of the enterprises to raise capital. SMEs can enhance employee engagement through the use of improved employee- management relations, regular training, teamwork, and increase in capacity utilisation rates, among others.

References