Chapter One — 1.1 Background to the Study

Innovation Capability has increasingly attracted the attention of researchers, regulators, and practitioners concerned with business sustainability of informal sector businesses. This growing interest reflects the recognition that innovation capability does not operate in isolation, but interacts with a wider set of institutional and market conditions found within Selected Small and Medium Enterprises in Nigeria.

Selected Small and Medium Enterprises in Nigeria presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

Despite a growing body of literature on innovation capability, there remains limited consensus on the precise nature of its relationship with business sustainability of informal sector businesses, particularly within Selected Small and Medium Enterprises in Nigeria. Many organizations continue to make decisions about innovation capability without a clear, evidence-based understanding of how those decisions ultimately affect business sustainability of informal sector businesses. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Innovation Capability on business sustainability of informal sector businesses in Selected Small and Medium Enterprises in Nigeria.
2. To assess the extent to which innovation capability influences business sustainability of informal sector businesses within the study area.
3. To identify the challenges associated with innovation capability in relation to business sustainability of informal sector businesses.
4. To recommend strategies for optimizing innovation capability in order to improve business sustainability of informal sector businesses.

1.4 Research Questions

1. What is the effect of innovation capability on business sustainability of informal sector businesses in Selected Small and Medium Enterprises in Nigeria?
2. To what extent does innovation capability influence business sustainability of informal sector businesses within the study area?
3. What challenges are associated with innovation capability in relation to business sustainability of informal sector businesses?
4. What strategies can be adopted to optimize innovation capability in order to improve business sustainability of informal sector businesses?

1.5 Significance of the Study

Beyond its academic contribution to the field of entrepreneurship, this study has practical value for management teams within Selected Small and Medium Enterprises in Nigeria seeking to understand how innovation capability translates into measurable outcomes around business sustainability of informal sector businesses. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

In terms of scope, this BSc study confines itself to Selected Small and Medium Enterprises in Nigeria, focusing specifically on how innovation capability relates to business sustainability of informal sector businesses within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.