The Influence of Social Capital on Business Performance of Entrepreneurs in Sokoto State

This study examines the influence of social capital on the business performance of small and medium enterprise entrepreneurs in Sokoto State, North West Nigeria, investigating how the density, diversity, and quality of entrepreneurs' social networks affect their access to resources, market information, and business opportunities. Social capital, the resources embedded in social relationships and networks, is particularly significant in economies where formal institutional support is weak and informal relationships substitute for market and institutional functions. Sokoto State's predominantly trade-based economy, structured around traditional Hausa-Fulani commercial networks, offers a distinctive context for examining social capital's entrepreneurial functions. The study employs a descriptive correlational design, administering a social capital measurement instrument and a business performance questionnaire to 200 SME owners drawn from Sokoto Central Market and the Sokoto Industrial Area. Structural and relational social capital dimensions were assessed separately. Data were analysed using Pearson correlation and hierarchical regression. Findings indicate that relational social capital, particularly the trust and reciprocity embedded in long-standing trading relationships, is the strongest predictor of business performance, accounting for a significant unique variance even after controlling for firm age and size. Structural social capital, measured by network size and bridge position, contributes positively to market expansion but not to financing access. Membership in traders' associations moderates the relationship between structural capital and performance. Recommendations include the formalisation of Sokoto's traders' association networks and the creation of business networking platforms accessible to younger entrepreneurs. Keywords: social capital, business performance, SME, Sokoto State, entrepreneurial networks.