The Role Of Good Governance On Business Prosperity In Nigeria (A Case Of Some Selected SMEs In Rivers State)

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The Role Of Good Governance On Business Prosperity In Nigeria (A Case Of Some Selected SMEs In Rivers State)

Chapter One


1.1 Background Of Study

Humanity’ ultimate hope and wish, wherever they are, particularly in their native nation, is to experience a certain level of decent and quality existence. As a result, all nations strive to reach or achieve the goals of rapid economic transformation and sustainable development, ensuring that their population live in better conditions in their own communities. Governance is a major topic among academics, as well as national governments and the general investing public. Given the importance of corporate governance to the economic health of firms and society as a whole, this is understandable. All stakeholders in the life of the company, including investors, creditors, management, employees, and other partners, are now concerned about governance (Kamara, 2005). To completely comprehend the concept of good governance, it is necessary to define the phrase first. Academics, scholars, and institutions have characterized governance in a variety of ways: Managers give leadership and direction, create an enabling climate, and integrate the systematized collaborative efforts of work groups through good governance. To perform this function effectively, managers must be capable of nurturing conceptual thinking, setting attainable goals, prioritizing work, and making appropriate judgments (Ugoji and Isele, 2009).Good governance, according to Musa (2007), is defined as the rules and practices that govern the relationship between company managers and shareholders, as well as other stakeholders, and it contributes not only to corporate growth and financial stability, but also to financial market integrity and economic efficiency. Good administration, according to Dignam and Lowry (2006), is a multifaceted topic. One of the central themes of corporate governance is to ensure that particular people in an organization are held accountable through measures that attempt to mitigate or eliminate the principal-agent issue. Good governance, according to Cadbury (2000), is concerned with maintaining a balance between economic and social aims, as well as between individual and communal interests. Good governance, according to Cole (2004), is the process through which businesses regulate how directors are recruited, compensated, and rewarded. It comprises safeguards to ensure that the financial statements of the company are presented in a fair and transparent manner. It also necessitates a focus on the ethics of running a public enterprise. According to Drucker (2003), the discussion about corporate governance is mostly about those who profit from business operations. It explains the dramatic shift toward the stockholders’ interests taking precedence. Regulatory authorities, the board of directors, management, shareholders, suppliers, creditors, employees, customers, and the general public are all involved in corporate governance. Furthermore, the essence of good governance is to ensure that all stakeholders’ interests are met to the greatest extent possible through effective corporate management.

1.2 Statement Of Problem

It goes without saying that the quality of management in a country’s corporate organizations has a direct impact on the country’s economic growth. Corporate organizations contribute to economic growth and development by employing a big percentage of a country’s workforce by increasing the labor force and raising citizens’ living conditions by providing useful goods and services (Cole, 2004). Unfortunately, the Nigerian economy has been plagued by falling industries, failed banks, stuttering public utilities, deteriorating educational standards, and an inadequate health-care delivery system. Corruption and administrative ineptitude are the root causes of all of this (Ejiogu, 2005). As a result, supporting good governance principles is one of the most effective ways to combat this social-economic problem (Anya, 2003). However, it is important to emphasize that the impact of the current economic downturn and the ongoing clampdown on SMEs may indicate that many Nigerian businesses are unlikely to follow good governance standards. As a result, an investigation of the role of good governance in encouraging commercial prosperity in Nigeria has become necessary.

1.3 Objective Of Study

The following are primary objectives of the study:

  1. To examine if there is a link between good governance and business prosperity in Nigeria.
  2. To ascertain if good governance culture has an impact on the market value of SMEs.
  3. To examine if good governance is necessary for SMEs’ success and growth.

1.4 Research Question

  1. What is the link between good governance and business prosperity in Nigeria?
  2. Has good governance culture had an impact on the market value of SMEs?
  3. Is good governance required for the success and growth of SMEs?

1.5 Significance Of Study

The significance of this study resides in the fact that it will provide an objective basis for evaluating the role of good governance in economic prosperity, as well as serve as a resource for future scholars in this field.

1.6 Scope Of Study

This study focuses on examining whether there is a link between good governance and business prosperity in Nigeria. It also wants to know if a good governance culture affects the market value of SMEs., to examine whether good governance is necessary for SMEs’ success and growth. This study is delimited to SMEs in Rivers state.

1.7 Limitation Of Study

Availability of materials, finance and time constraints to combine research work and academic work were major challenges the researcher encountered during this research.

1.8 Definition Of Terms

Good Governance:

Good governance is a way of measuring how public institutions conduct public affairs and manage public resources in a preferred way.


This is a person’s regular occupation, profession, or trade.


Prosperity is the flourishing, thriving, good fortune and successful social status.

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