<![CDATA[This study examines the intricate relationship between the business environment and the performance of small-scale enterprises (SSEs) in Ibadan North, Nigeria. Grounded in systems theory and resource-based view, the research conceptualizes the operating environment as a "constraint frontier" that defines the limits of entrepreneurial possibility. Through a descriptive survey design, data were collected from 250 entrepreneurs, managers, and staff using structured questionnaires, with analysis conducted via descriptive statistics and Chi-square tests. Findings reveal that environmental factors—particularly access to credit, infrastructural deficiencies, and unstable government policies—constitute binding constraints that significantly impede SSE performance. Statistical evidence confirms significant relationships between external environmental factors and performance (χ²=195.023, p=0.000), socio-cultural factors and patronage (χ²=82.877, p=0.000), and government policy and enhanced performance (χ²=126.108, p=0.000). Despite these challenges, SSEs demonstrate remarkable adaptive resilience through strategies prioritizing customer satisfaction, workforce training, and operational flexibility. The study identifies critical institutional gaps in financial intermediation, infrastructure provision, and policy coherence that perpetuate environmental scarcities. The research concludes that sustainable SSE development requires targeted institutional reforms that systematically lower transaction costs, mitigate risks, and expand the entrepreneurial opportunity space. Policy recommendations emphasize the need for credit market innovations, strategic infrastructure investment, and stable regulatory frameworks to transform the constraint frontier into an enabling ecosystem for SSE growth and economic development.]]>
