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Nigeria Journal of Management Sciences (NJMS), Benue State University

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Effect of Sub-Contracting on the Profitability of Small and Medium Scale Enterprises (SMES): Empirical Evidence from Selected Enterprises in Benue State

Diaka Sarah Hembadoon: Department of Business Administration Benue State University, Makurdi, Benue State, Nigeria

Anza Calvin Nyianshima and Isichei Ejikeme Emmanuel: Department of Business Administration Federal University, Wukari, Taraba State, Nigeria;


This research work ascertained the effect of outsourcing core operational activities (primary and accounting activities) on the performance of Small and Medium Scale Enterprises (SMEs) in Benue state. Survey research design was adopted with Gboko, Makurdi and Otukpo Metropolis of Benue state as survey area with population of 563 SMEs gotten from the records of Benue Board of Internal Revenue Service (BIRS) and a sample of 233 SMEs was selected using Taro Yemane's formula and distributed among five categories of SMEs. Simple random sampling technique was used in selecting respondents that provides answers to the self-administered questionnaire. The data was statistically analyzed using multiple regression technique. At the end of the research, the study found that; there is a significant relationship between outsourcing of primary activities and performance of SMEs in Benue but outsourcing of accounting activities has no significant effect on performance of SMEs in Benue. This study therefore recommends among others that SMEs should embark more on outsourcing of primary activities to attain the benefits of cost savings/restructuring which results in better customer service and consequently profitability; also, outsourcing process management through follow up steps like effective communication and monitoring should be employed and taken seriously to better reap the benefits of this maintenance/growth strategy.

Key words: Sub-contracting, Core activities, Small scale enterprises.

To get access to the full text of this article: Faculty of Management Sciences, Benue State University, Makurdi, Nigeria.

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