Analyzing the success factors in the development of absorptive capacity in service sector SMEs based in Nigeria

Small and medium scale enterprises (SMEs) have been identified as the catalysts and builders for economicgrowth and national development for both developed and developing countries, particularly Nigeria. Tosustain their competitive advantage in a highly competitive landscape, SMEs, in spite of their limitedresources, need to effectively learn and use new knowledge to innovate. Therefore, this study, throughcritical exploration of existing success factors within service sector SMEs based in Nigeria, attempts tohighlight the requirements for the effective development of absorptive capacity in these small and mediumscale enterprises.This descriptive qualitative study will be underpinned by the two theories : Absorptive Capacity Theory andSocial Exchange Theory. Research questions for this study include how do the SME owner’s perception ofknowledge exchange and the quality of relationships within small business networks contribute to thedevelopment of absorptive capacity, What challenges do SME owners face in a bid to initiate and/or improveknowledge exchange with other SMES for absorptive capacity development and how do SME owners buildand maintain quality relationships with other small business owners in Nigeria.Questionnaires, Interviews and a focus group were deployed to achieve these research objectives. Thequestionnaire part had 60 SME owners participating, out of which 20 were handpicked for the interviewstage and 6 participants for the focus group. Analysis of Data was done through a thematic analysis. Theresults revealed five overall themes which are engaging in knowledge exchange, knowledge exchangeparticipation, factors of absorptive capacity, influence of personality, and relationship building. The resultsindicated the participants received support from engaging in exchange of knowledge and buildingrelationships and that engaging in these activities of knowledge exchange and relationship building help keepSME owners focused in achieving goals.