Author(s): Sunday Ayoola Raymond, Abdoulrahman Aljounaidi Mhd Ramez, Al-Harath Abdulaziz Mohammed Ateik
The cooperation of small and medium scale Enterprises is becoming more important as a tool of economic development of a country. Entrepreneurs tend to work together in order to share their competencies, consolidate limited resources, and hereby increase their profitability. It is emphasized that the role of clustering is crucial in the development of SME sector, as SMEs may benefit from economies of scale and extend the operation limits. Thus, the current study has analyzed the effect of clustering activities on the performance of small and medium scales enterprises in Nigeria; The study adopted a quantitative research method by utilizing a self-administered questionnaire that involve 255 respondents comprising of fabric store owners and their employees. All stages of data analysis use the method of regression analysis as an analytical tool to develop a model and to test the study hypothesis. The outcomes of the study shows that Market Limitation (ML) and Employee Performance (EP) had negative effects on the Performance of Small and Medium Scale Enterprise (PSME), while Social Responsibilities (SR), Market Segmentation (MS), and Social Networking (SN) had significant positive effects on Performance of Small and Medium scale Enterprise (PSME). Given that SMEs in Nigeria are the main drivers of employment growth, it would be beneficial to conduct studies to ascertain whether there are any other factors effecting SMEs' performance, it would also be beneficial to expand the scope of this research by increasing both the population and sample size.