Inventory Management Practices and Performance of Micro and Small Enterprises in Nigeria

Abstract

This study examines the influence of inventory management practices on the performance of manufacturing Micro and Small Enterprises (MSEs) in Nigeria. Adopting a positivist philosophy and cross-sectional survey design, data were collected from 278 manufacturing MSEs across five industrial clusters in Nigeria (Lagos, Kano, Kaduna, Enugu, and Ogun State). Confirmatory Factor Analysis and Structural Equation Modelling were used for data analysis. Results indicate that all four inventory management practices significantly influence enterprise performance. Economic Order Quantity (EOQ) (0.294), Just-in-Time (JIT) (0.267), Vendor Managed Inventory (VMI) (0.231), and ABC Analysis (0.218). Collectively, these practices explain 25.8% of the variance in enterprise performance. The findings suggest that manufacturing MSEs can improve performance by adopting systematic inventory management practices, particularly EOQ, while strengthening supplier collaboration and inventory control. This study contributes to the literature by conceptualizing inventory management as a multidimensional organizational capability and testing its influence on MSE performance within Nigeria's challenging business environment, integrating Resource-Based View, Dynamic Capability Theory, Theory of Constraints, and Lean Theory.