ENTREPRENEURIAL FINANCIAL ORIENTATION AND ACCOUNTING PRACTICES ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Abstract

The adverse effects of poor financial accounting practices on the performance of small and medium-sized enterprises (SMEs) in Nigeria have necessitated examining how entrepreneurial financial orientation influences the implementation of modern accounting practices. This study examines the relationship between entrepreneurial financial orientation and accounting practices with a view to identifying implementation strategies that can enhance SMEs' performance. The study was guided by three research questions, and a descriptive research survey was used to carry it out in Northern Nigeria. The population comprised 1,120 active registered SMEs across the trade, services, agriculture, and manufacturing sectors in Plateau State, from which a stratified sample of 290 SME owners was drawn. A total of 285 valid questionnaire responses were analysed. Data were analysed using mean responses to the real limits of numbers for the research questions. Pearson product–moment correlation to assess relationships and ordinary least squares regression to test hypotheses at the 0.05 level of significance. The findings reveal a strong and positive relationship between entrepreneurial financial orientation and accounting practices; the dimensions of financial orientation innovativeness, risk-taking and proactive working capital management significantly influence the adoption of innovative accounting practices, and practical strategies for implementing accounting practices towards improving the performance of SMEs. The study concludes that enhancing entrepreneurial financial orientation is critical to strengthening the implementation of effective accounting practices among SMEs. It therefore recommends that SME owners and accountants cultivate greater financial innovativeness, risk tolerance, and proactive financial management to implement innovative accounting practices and improve the performance of SMEs in Nigeria.