The purpose of this study is to examine the effect of entrepreneurial capability on entrepreneurial success. Nine thousand, four hundred and fifty (9,450) small and medium enterprises (SMEs) who are registered members of National Association of Small and Medium Enterprises (NASME), National Association of Small Scale Industrialists (NASSI) and Association of Small Business Owners in Nigeria (ASBON) in Lagos State is the sample population for the study. Proportionate stratified random sampling technique is used to select sample size of 381 determined using the formula developed by the National Education Association (1960) for sample size determination. Research instrument is questionnaire. Primary data on the dependent variable (Entrepreneurial success) and independent variable (Entrepreneurial capability) are collected using questionnaire this research instrument. Entrepreneurial capability measures are entrepreneurial orientation and entrepreneurial self efficacy while measures for entrepreneurial success are profitability, market share, net asset growth, sales growth and government policies reflecting both financial and non financial measures. Fifty selected SMEs are used in a pilot study to pretest the research instrument. Analysis of data from the pilot study gives Cronbach’s Alpha values of 0.664, 0.795 and 0.85 for entrepreneurial orientation, entrepreneurial self efficacy and entrepreneurial success respectively. The result of the regression analysis indicated that entrepreneurial capability has a strong positive relationship with entrepreneurial success (R = .475). The coefficient of determination R2 is .226, suggests that 22.6% of the variation (or changes) in entrepreneurial success of selected SMEs in Lagos State is explained by entrepreneurial capability. The value of F (1, 208) = 60.605, p <.05, demonstrates that entrepreneurial capability statistically and significantly predicts entrepreneurial success. This is a clear indication that entrepreneurial capability significantly influences entrepreneurial success in Lagos State. The coefficient of entrepreneurial capability is statistically significant (t = 7.785, p <.05). The regression model explaining the results is given by: ENT_SU = -5.065 + 0.624ENT_CAP. Based on the findings, the null hypothesis (H04) which states that entrepreneurial capability has no significant effect on entrepreneurial success is rejected.
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