Determinants of Non-Indigenous Small and Medium Construction Enterprises Strategy for Competitive Advantage in North-Central Nigeria

Abstract

Nigerian economy (growing at 7.1%) is rising without Nigerians. The fact that the non-indigenous construction firms, most of which are SMEs, dominate the construction market is a contributory factor. Yet, only few empirical research have been undertaken to isolate the competitive advantage of these firms. The indigenous construction SMEs in North-Central region was shown among the weakest in Nigeria. Therefore this study examined the determinants of non-indigenous Small and Medium Construction Enterprises (SMCEs) strategy for competitive advantage in North-Central Nigeria. It was guided by research objectives which include; finding out the influence of resources, competitive strategy, critical success factors and value chain activities on the competitive advantage of foreign SMEs against rivals. The current effort directed at reducing competitive power of the non-indigenous SMCEs has been essentially protective. But with globalization and the continuous breach of national borders, World Trade Organization (WTO), continental and regional treaties; protectionist policies are ineffective. Therefore entrepreneurs must compete based on firm strategies. To establish this, the determinants of the competitive behavior of the foreign construction SMEs werethe study gap. It adopted descriptive survey and exploratory design. It developed a research model to specify the relationship between competitive success predictors and competitive advantage. A total of 1199 SMCEs operating in Abuja and Kaduna who actually participate in bids for construction projects formed the population of the study. It empirically tested the model using t-test and linear regression on 87respondents from Abuja and Kaduna construction SMEs. It also extends the Resource Based View [RBV] by empirically testing the relationships between resources and competitive advantage- from integrative, five forces and dynamic capacity frameworks. The work further clarified the role of competitive decision making on the basis of Michael Porter’s competitive strategy, analyzed competitive advantage from a Critical Success Factors model and finally tested Michael Porter’s construction SMEs Value Chain Activities. Findings show that 98.4% variation of competitive advantage is explained by the independent variables. The model was also significant at 5% level of significant. The t-values for the overall model suggest that all the important tests were rejected; which means resources, competitive strategy, critical success factors and value chain activities all affect competitive advantage However, resources contributed more than other strategies, therefore, the study recommends that for improved competitive strength, indigenous SMCEs should deploy resources strategy as the prime strategy. Competitive strategy, value chain activities, and critical success factors strategies were shown as the order of priority against foreign rivals.