Mediating Effect of Reward System on the Relationship Between Training and SMEs’ Performance in Osun State

Abstract

The reward systems in Small and Medium Enterprises (SMEs) in Nigeria face significant challenges rooted in economic, structural, and cultural factors. This current study examines the mediating effect of the reward system on the relationship between training as an independent variable and SMEs’ performance as a dependent variable. Using a simple random sampling method produced by the Microsoft Excel application package, 363 respondents were selected. A questionnaire was used to gather primary data for the study. Data analysis was performed by structural equation modeling using STATA version 15. Analysis revealed a significant and positive relationship between training and the reward system. Additionally, there is a strong positive correlation between training and the performance of SMEs. This implies that SMEs' performance can be predicted by both training and reward. It was also discovered that the performance of SMEs and training is partially mediated by the reward system. In order to demonstrate intellectual abilities, such as understanding the business environment, understanding globalization and integration, understanding market conditions, and understanding knowledge about competitors' strategies, managers should be trained to acquire modern entrepreneurial skills and appropriately rewarded. This will help SMEs perform well. The analysis highlights the critical role of training and reward systems in enhancing SME performance, underscoring the value of a well-structured reward system as both a motivator and a mediator between training and outcomes.