AN EMPIRICAL STUDY OF E-COMMERCE ADOPTION AND FINANCIAL PERFORMANCE AMONG SMEs IN IBADAN

This study investigates the impact of e-commerce innovation on the financial performance of small and medium-sized enterprises (SMEs) in Ibadan, Nigeria. With the rising importance of digital transformation in business competitiveness, the research tests two hypotheses A multi-stage sampling technique was employed to select a representative sample of 395 SMEs from a population of 29,250, using Yamane’s formula for finite populations. Primary data were adopted through a structured questionnaire, and analyzed using descriptive statistics and regression analysis. Descriptive results reveal high levels of e-commerce adoption (Mean = 3.66), with social media marketing (Mean = 4.18) and customer engagement via digital channels (Mean = 3.85) being the most widely implemented innovations. Business performance indicators also showed strong outcomes (Mean = 3.83), especially in customer reach expansion (Mean = 4.06). Regression analysis demonstrated that e-commerce innovation has a significant positive effect on SME performance (β = 0.751, t = 11.247, p < 0.001), explaining 56.4% of the variance (R² = 0.564) in business performance. Additionally, e-commerce adoption explained 54.2% of the variance in revenue growth, confirming a strong financial impact. These findings led to the rejection of both null hypotheses, providing robust empirical support for the beneficial role of digital innovation in SME growth.Sectoral analysis indicated technology based SMEs had the highest adoption levels (Mean = 4.15), followed by retail/wholesale businesses (Mean = 3.89), while agricultural SMEs lagged behind (Mean = 3.28), underscoring the influence of sector-specific dynamics.The study concludes that e-commerce adoption significantly enhances SME financial performance, aligning with global digital transformation trends and validating technology oriented theoretical frameworks. Therfore, recommendations ithat a shift beyond basic social media use to comprehensive e-commerce strategies, investment in staff digital literacy and training, engagement with digital marketing professionals, and implementation of robust cybersecurity measures to foster customer trust and platform resilience.