Social capital and its effect on business performance in the Nigeria informal sector

This study was aimed at investigating the effect of internal and external social capital on thefinancial and non-financial performance of businesses in the Nigerian informal sector. The study further investigated the controllingrole offirm age. A cross-sectional survey of 650 informal business owners in the Ikeja region of Lagos state,Nigeria was carried out. The analysis was carried out using the partial least square method of the structuralequation model (SEM). Findings revealed that without the controlling variable offirm age, social capital had asignificant effect on business performance, internal social capital had a significant effect on non-financial per-formance, it, however, had no significant effect onfinancial performance, while external social capital had nosignificant effect onfinancial and non-financial performance. With the controlling variable offirm age, socialcapital had a significant effect on business performance, internal social capital had a significant effect onfinancialand non-financial performance, while external social capital had no significant effect onfinancial and non-performance. The study, therefore, recommended that informal entrepreneurs take advantage of their internalsocial capital resources and also try to build their external social capital as they may become vital for their business success