Intellectual Capital as a Panacea to Sustainability in Small and Medium-Scale Enterprises

Abstract

Small and Medium-scaled Enterprises (SMEs) are regarded as the engine of growth globally, as they play the critical role of economic diversification, job creation, entrepreneurial and technological development as well as revenue generation. Despite their significance, the survival rate of SMEs is shallow, especially in Less Developed Countries (LDCs), which posed a severe threat to macroeconomic stability, and significantly affect their sustainability. The study examines the relationship between Intellectual Capital and the sustainability of small and SMEs in Nigeria. Intellectual Capital (IC) was proxied by knowledge management (KM) and financial literacy (FL), while sustainability was proxied by the Triple Bottom Line (TBL) goals. A critical review of the available literature revealed that both knowledge management and financial literacy are crucial to the sustainability (SUS) of SMEs. The study further revealed that SMEs operators do not have adequate financial literacy, especially as it relates to risk exposure, which creates a threat to their long-term sustainability. The study recommends, therefore, that SMEs operators should double their efforts on knowledge acquisition and training, especially on financial concepts. Finally, the research proposed a framework that could be used by SMEs to gain sustainability.