EFFECT OF E-COMMERCE UTILIZATION ON SMES PERFORMANCE IN ANAMBRA STATE

Abstract

This study examined the effect of e-commerce utilization on the operational efficiency of
small and medium-sized enterprises (SMEs) in Anambra State, Nigeria, by deploying the
Vector Autoregression (VAR) model. The analysis focused on the impact of online sales,
digital marketing, e-payment systems, website quality, and social media engagement on
operational efficiency. Data were collected from a representative sample of SMEs across
Anambra State and analysed using econometric regression techniques. The empirical
results indicated that online sales (β = 0.28, p < 0.01) and digital marketing (β = 0.33, p <
0.01) have a statistically significant positive impact on operational efficiency, highlighting
their critical role in enhancing SME performance. E-payment systems also exhibited a
positive effect (β = 0.21, p < 0.05), emphasizing the importance of efficient transaction
processes. Website quality was positively correlated with operational efficiency (β = 0.25,
p < 0.05), suggesting that a user-friendly online presence is essential for operational
success. However, social media engagement showed a complex relationship (β = 0.12, p >
0.05), indicating that while beneficial for brand awareness, its direct impact on operational
efficiency may be mediated by other factors. The VAR model also revealed significant
dynamic interactions among the variables, with Granger causality tests confirming that
changes in online sales and digital marketing significantly predict future changes in
operational efficiency. Impulse response functions further demonstrated that shocks to
online sales and digital marketing have lasting positive effects on operational efficiency
over time. These findings provided valuable insights for SME owners, policymakers, and
stakeholders in Anambra State. They underscored the necessity for continuous investment
in e-commerce infrastructure and strategic utilization of online sales and digital marketing
to sustain and enhance operational efficiency. The study concluded that targeted ecommerce practices were instrumental in driving SME performance in the digital economy