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University of San Agustin

Gen. Luna Street, Iloilo City, Philippines, 5000


Tel. No. (+63-33) 337-4841 to 44

CHAPTER I

Introduction

Background of the Study

As mentioned in the State of the Nation Address of the president of the Philippines,

that small and medium shall be developed and sustained in the locality. The role of small

and medium enterprise in the national economy cannot be underestimated. These

enterprises are being given increasing policy attention in recent years, particularly in third

world countries,partly because of growing disappointment with results of development

strategies focusing on large scale capital intensive and high import dependent industrial

plants. The impacts of small and medium enterprise is felt in many ways like greater

utilization of local raw materials, employment generation, encouragement of rural

development, development of entrepreneurship, provision of avenue for self-employment

and the provision of opportunity for training managers and semi-skilled workers(Levy

and Powell, 2010).

Overall economic development, a critically important role is played by small and

medium enterprise. Small and medium enterprise advocates firstly, it’s endurance in

competition has external benefits on economic efficiency, and productive growth.

Secondly, proponent of small and medium enterprise support frequent claim that SMEs

are generally more productive than large firms, but financial market and other

institutional improvements (World Scholars, 2012).

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Small and medium enterprises examine an expanded database of firms in the formal

manufacturing sector with fewer than 10, 20, 100 or 250 employees. Various indicators

are used to measure growth and there doesn’t seem to be any general measurement.

Therefore, sales and employment were the two most important indicators measuring the

firm’s size and growth. Sales figures are on the other hand affected by inflation and

exchange rates and it is difficult to compare sales figures between industries (Davidsson,

Delmar & Gartner, 2006).

The study begins with the hypothesis that countries with larger Micro-enterprise

(ME) or small and medium enterprise sectors have more rapid economic growth in per

capital income (Leegwater& Shaw, 2010). SMEs, especially start-ups, have lower

probabilities of survival than larger firms, leading to high rates of market entry and exit

across nearly all economic sectors. SME’s can be established in any locality for any kind

of business activity in an urban or rural area (Khalique, et al., 2011).

The life of the students as consumers and that of businessmen go hand in hand.

Since we are Business Management major Financial Management, we intended to be

involved in business world someday. We choose this topic Factors influencing the growth

of small and medium enterprises in Iloilo City that so that we will know what contributes

to the growth and development of small and medium enterprises.

The study attempts to know and understand the nature and activities of growth-

oriented owned businesses in Iloilo City by highlighting the problems faces by

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entrepreneurs during the growth process. If these small and medium enterprises could

grow, they would greatly affect the economy of Iloilo City.

The purpose of this research is to study the growth factors of small and medium

enterprises, their growth potential, and what are the obstacles for them to develop their

businesses in Iloilo City. The researchers also wanted to know if some factors such as

competition, employment, flexibility, globalization, initial capital, innovation, and years

of operation can influence greatly to the growth of small and medium enterprises.

Statement of the Problem

This study aims to determine the factors influencing the growth of small and medium

enterprises in Iloilo City for the year 2018.

Specifically, this study seeks to answer the following question;

1. What is the profile of the respondents?

2. What is the most influential factor affecting the growth of small and medium

enterprises in terms of flexibility, competition, globalization, innovation and employment

when respondents are taken as a whole and if they are classified according to age, initial

capital, sex, and years of operation?

3. Are there significant differences in the most influential factor affecting the growth of

small and medium enterprises in terms of competition, employment, flexibility,

globalization, and innovation when the respondents are taken as a whole?

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Hypotheses of the study

The null hypothesis was being tested;

There are no significant differences in the most influential factor affecting the

growth of small and medium enterprises in terms of competition, employment, flexibility,

globalization, and innovation when the respondents are classified according to age, initial

capital, sex and years of operation.

Conceptual Framework

This study was anchored to the concept of Levy and Powell (2005) which states

that the factors influencing the growth of Small and Medium Enterprises are the

competition, employment, flexibility, globalization and innovation. According to Levy

and Powell, the most important factors that influence the growth of small and medium

enterprises are the employment, flexibility and globalization. Employment is the most

evident public benefit of small business growth and it is the contribution made by Small

and Medium Enterprise. Small and Medium Enterprise’s play a big role in the creation of

jobs and country’s employment rate (Levy and Powell, 2005).

A key characteristic of an SME is flexibility, the ability to adapt to changing

environment. Companies are facing external pressures like a transforming market and a

high speed technological change. The Small and Medium Enterprise owner has

considerable personal influence over a firm’s strategies, tactics and operations to engage

in decision process across the firm. As a result, although a flat, informal organizational

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structure is likely to exist, decisions making tends to be quite centralized around the

owner (Levy and Powell, 2005).

The impacts of globalization as a factor to the growth of SMEs have pressured

SMEs to greater demands. Perhaps the most significant source of change impacting many

organizations today is the increasing globalization of organizations and management.

This occurs because firms to control costs, especially to reduce labour costs. Of course

another reason why firms are becoming more global is the response to competition

(Griffin & Moorhead, 2009). SMEs that are internationally active are generally growing

faster than their domestic equivalents. This gives pressures to SMEs to develop

environmental strategies to remain competitive. Many SMEs lack the resources to meet

the global challenge to internationalize. Other factors that can influence the growth of

small and medium enterprises are competition, and innovation. Competition is a threat to

survival; it is the competition that drives firms to improve productivity and therefore

drives growth (Hamann, 2013).

Innovation also plays a crucial role in now day business and it is regarded as a key

characteristic of SMEs, mainly due to the attitude of the manager. Innovative companies

are able to respond within the bounds of the knowledge about existing products or

services to changes required by the customer within their niche market (Levy & Powell,

2005).

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Most reviews and studies of work performance have not established a relationship

between decreased job performances with increasing age and conclude that job

performance is generally the same across all age groups. It was concluded that when

abilities match job requirements and when experience is taken into account, there is little

difference between the performance of older and younger workers (Benjamin and

Wilson, 2005).

Initial capital is essential when you start your own business. Unless you can count

on the bank of your relatives you will need financial backing such as a bank loan or

venture capital supplied by investors. A business plan is critical for securing your own

capital (Guffey, 2011).

Sex-based differences in each of these areas have a profound effect on economic

opportunities for men and women, the productivity of men and women’s labor, the

performance and potential of their businesses, and the incentives facing men and women

as economic agents (Klasen, 2012).

A year of operation is another factor for growth in most businesses today, the most

valuable asset they manage is their people and employee engagement and satisfactions

are strategic imperatives that every leadership team should understand and explore

proactively. Make money and add value to the community it exists to serve (Shawn Parr,

2013).

Paradigm of the Study

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Independent Variable Dependent Variable


Age Flexibility

Initial Capital Competition

Sex Globalization

Years of Operation Innovation

Employment

Figure.1 Factors influencing the growth of Small and Medium enterprises


Employment

Scope and Limitations of the study

This study focused on the factors influencing the growth of small and medium

enterprises in Iloilo city specifically in Lapaz, Mabini Street, Delgado Street, Valeria

Street and Delgado Street, for 1st Semester, 2018-2019.

The study determines how dependent variables like flexibility, competition,

globalization, innovation, and employment influence the Small and Medium Enterprise’s

growth. The study also used independent variables limited to age, initial capital, sex, and

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years of operation. The respondents of the study are the two hundred (200) managers/

owners of small and medium enterprises in Iloilo City.

The researcher-made instrument IS used to determine the factors that influenced

the growth of small and medium enterprise. The respondents are two hundred (200)

owners of small and medium enterprises.

The statistical tools for descriptive data analysis are frequency counts, percentages,

means, and standard deviations while Mann-Whitney U Test, and Kruskal Wallis Test for

the inferential data analysis. All inferential statistics are set at .05 level of significance.

Significance of the study

The study is beneficial to the following:

Owners of Small and Medium Enterprises. These findings could guide the

owner/owners on how his/their management qualities could influence the way business is

being run smoothly and may gain insights about Small and Medium Enterprise to further

evaluate and develop the growth of their enterprise.

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Future Entrepreneurs. Through this study, the future entrepreneurs will be able to

evaluate and get information about Small and Medium Enterprises in Iloilo City which

they can use in their teaching.

Researchers. The researchers would be able to gain knowledge about the factors

influencing the growth of Small and Medium Enterprises in Iloilo City which serve as

guide in understanding their field of specialization.

Definition of Terms

To give clarity on the terms used in this study, the following terms were defined

conceptually and operationally:

Age is the length of time that a person or thing has existed (American Heritage 5th

edition, 2011).

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In this study, age was classified how old the owner/ managers started their

business.

Competition when two or more organizations act independently to supply their

products to the same group of consumer (Delmar, 2013).

In this study, competition drives firms to improve productivity and therefore drives

growth

Employment is an agreement between an employer and an employee that

employee will provide certain services (The Balance Career, 2016).

In this study, employment refers to the people who are set to work in small and

medium enterprises in Iloilo City.

Flexibility is an ability to adapt an operating system to respond to the changes in

environment (Matthew Torren, 2014).

In this study, flexibility referred to the ability of a company to make whatever

internal changes are necessary to respond effectively to the changing outward

environment, as quickly as possible.

Globalization the processes by which businesses or other organizations develop

international influence or start operating on an international scale. (Business Dictionary)

In this study, globalization refers to the free movement of goods and services of

small and medium enterprises across the world.

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Gen. Luna Street, Iloilo City, Philippines, 5000
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Growth is the process of improving some measure of an enterprise's success

(Business Dictionary, 2015).

In this study, growth refers to the increase in the market value of the goods and

services produced by an enterprise over time.

Innovation is the act that endows resources with a new capacity to create wealth

(Peter Drucker, 2015).

In this study, innovation refers to the results when ideas are applied by the

company in order to further satisfy the needs and expectations of the customers.

Small and Medium Enterprise - Non-subsidiary, independent firms which

employ less than a given number of employees (OECD, 2013).

In this study, small and medium enterprise refers to the business establishments in

Iloilo City.

Years of Operation - is the state of being active (Farlex Dictionary, 2016).

In this study, years of operation refer to the age of the enterprise or years the

enterprise is operating or existing.

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CHAPTER II

Review of Related Literature

This chapter represents the review of literature and studies that were related to the

past investigation of the factors influencing the growth of Small and Medium Enterprise.

Small businesses are the engine of growth and development of any economy,

generating jobs and income, stimulating competition, sources of innovation, creating

possibilities for business ventures and etc. (de Kok et al., 2011). The world economic

crisis, which caused series of unexpected events, further demonstrated the vulnerability

of large companies and the consequences, and even more revealed the importance of

small business for economic recovery in the post-crisis period. The huge presence of

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small businesses in any economy provides a basis for reviewing various aspects related to

their operations. In terms of increasing the importance of small business for the recovery

and growth of world economy, growth of small businesses imposes itself as a relevant and

important research area. Additionally, the high failure rate, i.e. mortality of small

businesses, increases the interest towards overcoming issues related to growth of small

business.

Growth is considered as a phenomenon which is determined by various factors, in

and out of control by the owner or the management of small businesses. One of the main

problems in analyzing growth of small business is that most of the research considers the

extent of growth, while usually not perceiving the existence of substantial qualitative

differences in how businesses achieve growth (McKelvie and Wiklund, 2010). An

additional problem concerning the issue of growth is typically the attention on general

factors that influence the growth, associated with five factors flexibility, competition,

globalization, innovation and employment (Wiklund et al, 2009). These factors are often

beyond the control of the owners of small business, especially those related to growth and

development.

The biggest concern of the business that enters this stage is the consolidation and

control of financial gains, caused by rapid growth and secondly, maintaining the

advantages of the small business, which means flexibility in response and the

entrepreneurial spirit. In this part of development, the business typically focuses more

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attention to efficient management of products or services, and not so much to expansion

of activities. The business must extend its management forces quickly enough to

eliminate inefficiencies, which can produce growth and bring the business to another

professional level using the tools as: budget, strategic planning, and management by

objectives and standard cost systems.

Studies have shown that size affects growth although no agreement has been

reached on whether small enterprises tend to grow more than big ones (Bentzen et al.,

2012; Brito et al., 2007; Daunfeldt&Elert, 2013; Teruel-Carrizosa, 2010). For instance,

Bentzen et al. (2012) analyzed a group of Danish industries during 15 years and

concluded that big enterprises had a relatively bigger growth than smaller ones. Similarly,

Brito et al. (2007) investigated a database with 13,221 firms from 46 countries, based on

9-year data, and identified a positive relationship between size and growth rate. However,

the relationship between size and growth is a rather complex affair: in industries with a

great number of new firms, the small firms are at a disadvantage and small firms are

obliged to grow fast or quit. On the other hand, smallfirms in mature industries have a

great probability in obtaining lower growth rates due to reduced levels of opportunities.

Innovation and market structure determine growth. There is a great probability that

small innovating firms grow faster than big firmst hat shun innovations

(Daunfeldt&Elert, 2013). Market structure has an influence on the firm´s growth

capacity, especially service ones which are more heterogeneous and tend to grow less

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than industrial firms. Although industries require heavy investments; service firms quit

the market quickly (Teruel-Carrizosa, 2010). If, on the one hand, small enterprises

require specialists and counseling firms less, with increasing chances of growth

(Davidsson et al., 2010), the use of their abilities to enhance growth derives from the

learning process acquired by experience and over time. The firm´s growth will depend on

the use of their learning capacity to develop efficiency.

The innovation trend was the size of the enterprising orientation with the greatest

influence and evidenced the innovation effect on growth. Similarly, Omri&Ayadi-Frikha

(2014) identified the positive effect of innovation on growth in small Tunisian

enterprises.

The importance of small and Medium Sector in the Philippines

Small and medium enterprises (MSMEs) have a very important role in developing

the Philippine economy. They help reduce poverty by creating jobs for the country’s

growing labor force. They stimulate economic development in rural and far-flung areas.

They serve as valuable partners to large enterprises as suppliers and providers of support

services. They serve as breeding ground for new entrepreneurs and large corporations. A

vibrant MSME sector is thus an indication of a thriving and growing economy. Despite

policies that aim to provide an enabling environment for MSME development, the sector

still faces various constraints that prevent it from realizing its full growth and potential.

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The importance of SMEs to social and economic development of the local

economy is almost undisputed. Throughout the country, an SME is a priority in most

countries as it is widely recognized. There is no doubt that SMEs constitute the seed-bed

for the imminent generation of entrepreneurs. (Aryeetey, 2001).Small and medium rural

and urban enterprises have been one of the major concerns for many policy makers in an

attempt to accelerate the rate of growth in the localeconomy (Aryeetey, 2001).

SMEs provide employment and incomes for a large portion of the urban labor force and

are a significant source of total output. It is estimated that SMEs employ about 22% of

the adult population in most developing countries (Daniels, 2014).

Factors influencing small and medium enterprises

Flexibility

Flexibility is a way to help people define how and when work is done, flexibility helps

employers and employees work effectively to enable the organization achieve its

objectives. (Simonetta Manfredi, Director, Centre for Diversity Policy Research, Oxford

Brookes University.)Flexibility is seen to be important in workplace to both employers

and employees because it gives them an opportunity to organize the way they work in a

way that will be comfortable with their personal lives. For employers flexible working

can help retain staff who have the required and skill required by the employer, it also

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widens the talent pool in the job market enabling them to recruits potential workers with

more skill and still retain the staffs that are loyal and committed which can lead to an

increase in productivity and profitability (Confederation of British Industry 2009).To

raise morale and job satisfaction: flexible working increases the morale of employers to

perform at their utmost best because they feel they are treated as adults who have control

of their life and their time and they tend to perform at their utmost best when they are at

work.

Reflections on the flexibility of organizations became an important issue in the

field of management sciences. In general approach, the notion of flexibility is related to

the ability of an organization to quickly and easily implement changes (to adapt) in

response to internal or (more often) external impulses. However, the notion of flexibility

is not precisely defined and different authors propose different approaches, additionally

distinguishing specific kinds of flexibility. A broad summary of these definitions is

presented by R. Krupski and G. Osbert-Pociecha (2008, pp. 15-23). Here, flexibility is

defined as a characteristic (quality) as well as an ability of an organization (see more:

Czakon 2012, pp. 146-151) enabling it to remain resilient through responding freely to

new and changing circumstances (impulses), altering and engaging in beneficial

activities.

Flexibility is described through a scope of possible states (options, goals, actions)

as well as the time and costs necessary to achieve them. Moreover, it requires

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concentration and liquidity of the organization’s resources. R. Krupski (2006, p. 9)

emphasizes also the two dimensional character of flexibility, which is composed of: the

promptness of reaction (or creation) and the level of adaptation in each of the

organization’s elements alone and in all of them together.

Competition

The existing literature on SME competitiveness primary focuses on identifying

the factors that are relevant to SME competitiveness and the determinants of its success.

It emphasizes on the role of innovation as a key element of competitiveness and it mainly

focuses at a country level.

Karaev et al examine the use of a cluster approach among SMEs as a tool for

meeting their challenges related to globalization and trade liberalization, as well as

investigating its contributing factor in the process of increasing their competitiveness.

Munir et al look at the sustainability of the competitive advantage of SMEs by

studying the capabilities that they need to develop in order to achieve it.

Globalization

Globalization has impacted SMEs in that it has changed the role of SMEs within

domestic economies. Initially, SMEs were generally viewed as less efficient enterprises

than their larger counterparts and conventional wisdom would have predicted that

increased globalization would present a more hostile environment to small businesses.

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The additional costs of globalization that is fixed costs of learning about foreign

environments, communicating at long distances, and negotiating with foreign

governments would be a reason for expecting that engaging in foreign investment will be

mainly an activity of large firms (Audretsch, 2009).

SMEs seem less equipped to embrace opportunities presented while confronting

challenges of globalization. Globalization offers SMEs opportunities to participate in 6

the regional and international markets while internationalization presents opportunity for

growth and development beyond the local market. However globalized production by

multinationals presents new threats in form of increased competition

(Kaushalesh&Peedoly, 2006). Limited access to global markets denies SMEs significant

opportunities confining them to saturated local markets whereas internationalization is

necessary for their survival and expansion. Barriers that limit SME internationalization

include limited information on foreign markets and technology, lack of managerial skills,

limited knowledge, and limited resources to finance exports, inefficient transactions and

limited product and service quality to meet customer requirements (OECD, 2010).

Innovation

Small and medium enterprises have been considered one of the driving forces in

the economy due to their numeral contributions in terms of technological innovations,

employment generation, export promotion to list a few (Subrahmanya et al, 2010).

Innovation is the key to the growth of SMEs as it provides firms with a competitive edge

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over other firms in the industry. Technological innovation plays in strategically to

provide firms with a competitive edge as well as help such firms to gain entry into new

markets (Becheikh et al 2006). Burrone and Jaiya 2005 put it that the ability of firms to

innovate varies significantly depending on their sector, size, focus, resources and

business environment in which they operate.

Many studies have been conducted and it seems evident that there exists a strong

relationship between technological innovation and the growth of SMEs done in firms

based in different industries. Coad and Rao (2008) probed the relationship between

innovation and the growth of sales for firms in high tech sectors. Using a quartile

regression approach, they observed that innovation is of a crucial importance for selected

fast growth firms. If any undertaken innovation is successful, the share of innovated new

products is likely to increase in the total sales of the firm and when this happens, firms

will be able to achieve growth in their sales turnover, investment and employment which

would all result to achieving growth of firm size. Technological innovation is a key factor

in a firm’s competitiveness. Technological innovation is unavoidable for firms which

want to develop and maintain a competitive advantage and gain entry in to new markets

(Becheikh et al. 2006). Among firms of different sizes, SMEs are generally more flexible,

adapt themselves better, and are better placed to develop and implement new ideas. The

flexibility of SMEs, their simple organizational structure, their low risk and receptivity

are the essential features facilitating them to be innovative. Therefore, SMEs across

industries have the unrealized innovation potential (Chaminade & Vang 2006). Through

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empirical research one can generate new and creative ideas about products and processes.

Some researchers observe that increasing profit of organization is because of change in

technology.

Employment

According to Ayyagari et al. (2007) asserted that the promotion of the SME sector

is a core element to foster employment, economic growth, and poverty alleviation. Beck,

Demirguc-Kunt, & Levine (2005) found a large SME contribution to employment, and

World Bank (2004) stated that this contribution has been increasing particularly in

developing countries. Furthermore, Stein et al. (2010) highlighted that SMEs in

developing countries represent approximately 45 percent of employment and

approximately 33 percent of GDP. Based on a sample composed of 104 developing

countries, Ayyagari et al. (2011) stated that small firms (less than 20 employees)

contribute around 20.21 percent to total permanent, full-time employment. When small

firms and medium firms (20 to 99 employees) are considered together, the mean

employment share of SMEs is 47.94 percent which is comparable to the contribution

made by large firms.

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CHAPTER 3

RESEARCH METHODOLOGY

This chapter deals with the research design used in the research study. It also

contains the respondents of the study, research instrument, validity and reliability, data

processing and the statistical tools used in the study.

Research Design

This research study used the descriptive method of research. According to Yin

(2003), descriptive research describes what is. It involves the description, recording,

analysis, and interpretation of the present nature, composition or process of phenomena.

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Furthermore, the focus is on prevailing conditions, or how a person, group or thing

behaves or functions in the present. Moreover, it often involves some type of comparison

or contrast (Amante, 2008).

Descriptive studies are aimed at finding out "what is," so observational and

survey methods are frequently used to collect descriptive data (Borg & Gall, 1989).

Descriptive studies report summary data such as measures of central tendency including

the mean, percentage, and correlation between variables. Survey research commonly

includes that type of measurement, but often goes beyond the descriptive statistics in

order to draw inferences.

Respondents of the study

The respondents of the study were the 200 owners and managers of selected small

and medium enterprises in Iloilo City. For choosing the sample, using the Convenience

sampling wherein our samples vary according to the availability of the owners of small

and medium enterprise, keeping in mind the objective of researching the SME’s.

Data Gathering Instruments

The instrument was a researcher-made questionnaire for the SME’s owner-

entrepreneurs. The questionnaire was composed of two parts. Part I which include the

personal details of the owner and his/her business specific age, sex, initial capital and

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years of operation. Part II, which includes the questionnaire proper in terms of

competition, employment, flexibility, globalization, and innovation.

. A letter of permission stating the purpose of the study was sent to the owner or

manager of different enterprises.

The questionnaire is properly focused on the most influential factor of the growth of

small and medium enterprises in Iloilo City.

A copy of the researcher-made questionnaire was submitted for content validation

to a panel of evaluators who are considered in the field of research and education. It was

done in order to determine whether the questions in the researcher-made questionnaire

are valid or not.

Data Gathering Procedure

The study was conducted in Iloilo City. The permission to conduct the study

was requested from the research adviser. A letter of permission stating the purpose

of the study was sent to the owner or manager of the enterprise. The form was asking

permission from the respondents to gather relevant data necessary for the study. The

consent guarantees the confidentiality of the information gathered from the respondents.

The respondents were asked to read and answer the questions themselves. The

researchers showed sincere gratitude for the active participation in our research study.

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The respondents took their time to answer the questionnaire. After the

respondents have answered the questionnaires, this was gathered and checked by the

researcher for completeness. The data were gathered, encoded and tabulated using the

appropriate statistical tool. The mean scores were interpreted as follows:

Mean Interpretation

4.21- 5.00 Highly Influential

3.41- 4.20 Influential

2.61- 3.40 Moderately Influential

1.81- 2.60 Slightly Influential

1.00- 1.80 Not Influential

Statistical data analysis

The statistical tools used in the study were the frequency counts, percentages, mean,

Mann-Whitney U-Test, and Kruskal Wallis Test.

Frequency counts were used to determine the average and number of occurrences of

the variables.

The mean was used to describe the level of the factors influencing the growth of

small and medium enterprises when taken as a whole and when grouped according to

age, initial capital, sex, and years of operation.

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Rank was used to determine the most influential factor influencing the growth of

small and medium enterprises when taken as a whole and when grouped according to

age, initial capital, sex and years of operation.

Mann-Whitney U test is a non parametric test and to be used to determine the

significant differences between two variables.

Kruskal Wallis is non-parametric test and to be used to determine the significant

differences between three or more variables.

All statistical computations were computer-processed using the Statistical Package

for Social Sciences (SPSS) software set at 0.05 level of significance.

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION

This chapter presents the data gathered by the respondents. These data were

tabulated and analyzed so that researchers can come up with the conclusions and

recommendation that will be presented in this study. It aims to answer the following

statement. First is to identify the profile of the respondents, second, to identify the factor

influencing the growth of small and medium enterprises in Iloilo City when respondents

are taken as a whole and classified according to age, sex, initial capital and years of

operation. Lastly, to know if there is significant difference in the factors influencing the

26
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growth of small and medium enterprises terms when respondents are taken as a whole

and classified according to age, sex, initial capital and years of operation. These were

subjected to analysis and interpretation. Descriptive analysis was presented first, followed

by inferential analysis.

Profile of the respondents

Table 1 shows the result of the study that 200 respondents were classified

according to sex, age, initial capital and years of operation.

Majority 112 (56%) of the respondents with an age bracket of 41-50 years old, 62 (31%)

with an age bracket of 31-40 years old, 15 (7%) with an age bracket of over 50years old,

and 11(6%) with an age bracket of below 31 years old. This means that older owners are

more experience than younger owners.

When respondents are grouped according to sex, there are 117 (58%) male

owners and 83 (42%) female owners. As can be noted, there are more males respondents

compared to female respondents in this study.

When grouped according to initial capital, there are 145 (72%) with below 3

million pesos, 45 (23%) with 3-15 million pesos, 10 (5%) with more than 15 million

pesos. In terms of years of operation, there are 67 (23%) enterprises below 5 years, 68

(34%) with 5-10 years, 45 (23%) with 11-15 years, and 20 (10%) more than 15 years of

operations. The data shows that older firms grow faster than the younger ones because of

the experience over the years.

27
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Table 1. Profile of the Respondents

Category f %
Entire Group 200 100
Age
Below 31 years old 11 6
31 – 40 years old 62 31
41 – 50 years old 112 56
Over 50 years old 15 7
Sex
Male 117 58
Female 83 42
Initial capital

Below 3 million 145 72


3 – 15 million 45 23

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More than 15 million 10 5


Years of operation
Below 5 years 67 33
5 – 10 years 68 34
11 – 15 years 45 23
Above 15 years 20 10

Table 2 show the most influential factor affecting the growth of small and medium

enterprises were “highly influential” in terms of flexibility (M = 4.72, rank = 1st),

competition (M = 4.63, rank = 2nd), globalization (M = 4.58, rank = 3rd), innovation (M =

4.57, rank = 4th), and employment (M = 4.45, rank = 5th) with the mean scores which fell

within the scale 4.21 – 5.00. The data shows that flexibility was rank 1st as the highly

influential factors affecting the growth of small and medium enterprises in Iloilo City.

Table 2 Most influential factor affecting the growth of small and medium enterprises
when takes as a whole

Factors Means Description


Flexibility 4.72 Highly influential
Competition 4.63 Highly influential
Globalization 4.58 Highly influential
Innovation 4.57 Highly influential
Employment 4.45 Highly influential

Table 2.1 shows that the factors are “highly influential” in the growth of small

and medium enterprises when they are categorized according to age. It shows that

29
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competition is highly influential for respondents with an age below 31 years old

(M=4.78), highly influential (M=4.56), for respondents of 31-40 years old, highly

influential (M=4.66,) for the age bracket of 41-50 years old, and highly influential

(M=4.53) for respondents over 50 years old with a mean score of 4.63. Competition is

highly influential in the growth of small and medium enterprises when they are

categorized according to age.

It shows that employment is highly influential for respondents with an age below

31 years old (M=4.27), highly influential (M=4.40), for respondents of 31-40 years old,

highly influential (M=4.46,) for the age bracket of 41-50 years old, and highly influential

(M=4.73) for respondents over 50 years old with a mean score of .4.46 employment is

highly influential in the growth of small and medium enterprises when they are

categorized according to age.

It shows that flexibility is highly influential for respondents with an age below 31

years old (M=4.47), highly influential (M=4.72), for respondents of 31-40 years old,

highly influential (M=4.71,) for the age bracket of 41-50 years old, and highly influential

(M=5.0) for respondents over 50 years old with a mean score of 4.72 flexibility is highly

influential in the growth of small and medium when they are categorized according to

age.

It shows that globalization is highly influential for respondents with an age below

31 years old (M=4.69), highly influential (M=4.54), for respondents of 31-40 years old,

30
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highly influential (M=4.56,) for the age bracket of 41-50 years old, and highly influential

(M=4.80) for respondents over 50 years old with a mean score of 4.6 for Globalization is

highly influential in the growth of small and medium enterprises when they are

categorized according to age.

It shows that innovation is highly influential for respondents with an age below 31

years old (M=4.38), highly influential (M=4.53), for respondents of 31-40 years old,

highly influential (M=4.58,) for the age bracket of 41-50 years old, and highly influential

(M=4.67) for respondents over 50 years old with a mean score of 4.54 innovation is

highly influential in the growth of small and medium when they are categorized

according to age.

One of the ways has been through entrepreneurship, which means that businesses

run by people of all ages have cropped up. , the results of the study probably means that

factors are highly influential in a business, most older entrepreneurs and managers may

have more personal experience compared to the younger ones, but due to availability of

knowledge in our modern society, young entrepreneurs can cut the learning curve in a

dramatic rate by learning from the experience and mistakes of other people from the past,

this is the reason why even respondents have unclear diversified personal reasons, they

still agree on the same idea that they must be aware of their competitions to be

competent in quality and service, optimize their employment to provide leveraged

manpower for operations ,be updated with the latest trends to be flexible, take advantage

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of modern globalization to eliminate geographic burdens for overall growth,must

consider spending specified amount of their primary resources to avoid compromising

state of the overall initial capital, must innovate to satisfy the demand of their primary

need which is customers,and read stat numbers, learn priceless ideas, identify perfect

pitches for a call to action strike, these ideas can be gained from years of operation from

other ventures to their own, these factors must not be ignored no matter how old is the

person who runs the enterprise.

Table 2.1 Most influential factor of Small and Medium Enterprises when classified
according to age.

Factors Below 21 yrs. Old 31-40 yrs. Old 41-50 yrs. Old Over 50 yrs. Old
Mean Mean Mean Mean
Flexibility 4.78 4.56 4.66 4.53
Competition 4.27 4.40 4.46 4.73
Globalization 4.47 4.72 4.71 5.0
Innovation 4.69 4.54 4.56 4.80
Employment 4.38 4.53 4.58 4.67
Table 2.2 shows the factors influencing the growth of small and medium

enterprises were “highly influential” in terms of flexibility (M = 4.72, rank=1st), followed

by competition (M=4.58, rank= 2nd), globalization (M=4.52, rank =3rd), innovation

(M=4.51, rank= 4th) and lastly employment (M= 4.47, rank= 5th).

32
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According to World Health Organization, 50.4% of the total world population

were male and the remaining 49.6 % are females, and according to Forbes.com, only 4

women belongs to the top 40 Richest people in the world. This is interesting because the

top richest people in the world are entrepreneurs, this supports the theory that males are

generalists and women are specialists, the positive nature of males when it comes to

professional career management and personal development is they provide dull

and straightforward solutions to every problem, they focus on things that really matter

and overlook often overlook miscellaneous subjects. Men tend to make them quicker and

women need more time. Male entrepreneurs focus on making sure costs are under control

and are more profit driven. Men and women tend to start different kinds of enterprises.

When it comes to financial risk, men are more willing to undertake the risk than women.

Men and women also differ in how they manage their businesses. Men tend to be more

tasks oriented than women.

Women, on the other hand establish good relationships with employees,

relationships are more important to women. They are more focused and firm when it

comes to making decisions, doesn’t easily give up and they are more positive, Women

analyze each circumstance, they think critically before they make decisions. Women

claim to manage using more “feminine” strategies than men. An example of this would

be that women tend to value the relationships with their employees more than the task at

hand. Men and woman also may think differently. Male entrepreneurs are more logical

33
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thinkers. Female entrepreneurs are more intuitive thinkers. Women exhibit more social

leadership styles that focus on communication and expressive behavior.

This idea states that entrepreneurs are visionaries who form an image of their

business that helps guide them to success. To grow a venture one must effectively

communicate their vision to their employees and stakeholders. Owners and managers

must have clear intentions of where they want to go. The inspiration that an entrepreneur

has for a business must be followed up with consistent attention and intention.

Entrepreneurs are goal oriented and focus to achieve their goals, men and woman may

have distinct contrasting characteristics, yet factors presented in this study are highly

influential because they serve as foundations for every business venture.

Table 2.2 Most influential factors of Small and Medium Enterprises when classified
according to sex.

Factors Male Female


Mean Mean
Flexibility 4.70 4.75
Competition 4.58 4.70
Globalization 4.52 4.65
Innovation 4.51 4.62
Employment 4.47 4.43
Table 2.3 shows the factors influencing the growth of small and medium

enterprises were “highly influential” with a bracket of below 3 million in terms of

flexibility (M=4.67, rank=1st), followed by competition (M=4.63, rank= 2nd), innovation

(M=4.54, rank=3rd), globalization (M=4.49, rank=4th), lastly employment (M=4.44,

rank=5th).

34
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With an initial capital bracket of 3-15 million, flexibility (M=-4.89, rank=1st)

“highly influential”, globalization (M=4.78, rank 2nd), competition (M=4.60, rank= 3rd),

innovation (4.53, rank=4th) and employment (M=4.44, rank=5th).

For the initial capital bracket of more than 15 million, globalization and

innovation (M=4.90, rank=1st) were “highly influential” followed by flexibility,

competition, and employment (M=4.70, rank= 2nd).

The results probably mean that initial capital is crucial to the success of any new

business. There are some differences between entrepreneurs regarding the financing in

the businesses. Most ventures usually start their business with less capital and their

businesses tend to be smaller, lack of start-up capital can affect the survival rates of

businesses and their ability to grow.

Table 2.3 Most influential factor of Small and Medium Enterprises when classified
according to initial capital

Factors Below 3 Million 3-15 Million More than 15 Million


Mean Mean Mean
Flexibility 4.67 4.89 4.70
Competition 4.63 4.60 4.70
Globalization 4.49 4.78 4.90
Innovation 4.54 4.53 4.90
Employment 4.44 4.44 4.70

Table 2.4 shows the factors influencing the growth of small and medium

enterprises when classified according to years of operation under the bracket of below 5

35
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years old were “highly influential” in terms of flexibility and competition (M=4.69,

rank=1st). For the bracket of 5-10 years old, flexibility (M=4.65, rank=1st) were “highly

influential”. Under 11-15 years old, flexibility (M= 1.80, rank=1st) and above 15 years

old flexibility (M=4.85, rank=1st) were “highly influential”.

` The results of the study could mean that time is limited no matter how you slice it;

there are 24 hours in a day. That applies in your business, and to your competitors who

only seem able to do half the amount of work you do. if you want your business to grow,

you have to acknowledge the importance of finding a way to manage this limited

resources called time, as the old saying goes “time change everything” this supports the

statistic that most business fails for the first 5 years, change happens along with them.

Firms operating in today’s economy are experiencing increased pressure due to

several factors, including a rapidly changing business environment, shorter product life

cycles, increasingly demanding and less loyal customers with rapidly evolving

preferences, and fierce competition these factors seek the ability to adapt in different

trends (BuckiandPesqueux 2000, Dryer and Gronhaug 2004).

Table 2.4 Most influential factor of Small and Medium Enterprises when classified
according to years of operation

Factors Below 5years old 5-10 years old 11-15 years old Above 15 years
old
Mean Mean Mean Mean
Flexibility 4.69 4.65 4.80 4.85
Competition 4.69 4.58 4.58 4.70

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Globalization 4.57 4.53 4.60 4.70


Innovation 4.58 4.61 4.47 4.50
Employment 4.47 4.38 4.53 4.45

Inferential Data Analysis

The Mann Whitney U-test results in Table 3 revealed that the male and female

managers/ owners differ significantly in the factors of the growth of small and medium

enterprises in terms of flexibility (U) = 3862.00, competition (U) = 3805.00,

globalization (U) = 3853.50, all p value are less than .05 while employment (U) =

4257.50, and innovation (U) = 4287.00 does not differ significantly, obtaining p value

greater than .05. The null hypothesis which states that there is no significant difference in

the growth of small and medium enterprises in terms of flexibility, competition, and

globalization was rejected while employment and innovation was accepted when they are

categorized according to sex.

The result simply implied that with regards to sex, male and female owners/

managers have different perception in terms of the growth of small and medium

enterprises.

Table 3 The difference of the Growth small and medium enterprises in Iloilo City
when categorized according to sex.

Variables N Mean Sum of Mann- Sig. Remarks


Rank Ranks Whitney U value

Flexibility

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Male 117 92.01 10765.00 3862.000* .010 Significant


Female 83 112.47 9335.00

Competition
Male 117 91.52 10708.00 3805.000* .007 Significant
Female 83 113.16 9392.00

Globalization
Male 117 91.94 10756.50 3853.500* .010 Significant
Female 83 112.57 9343.50

Employment
Male 117 105.61 12356.50 4257.500 .128 Not Significant
Female 83 93.30 7743.50

Innovation
Male 117 95.64 95.64 4287.000 .152 Not Significant
Female 83 107.35 107.35
* Difference is significant at .05 level of significance.
The Kruskal Wallis test results in Table 4 revealed that the managers/ owners

differ significantly in the factors of the growth of small and medium enterprises in terms

of flexibility (X2) = 31.320, competition (X2) = 11.586, globalization (X2) = 10.077, and

employment (X2) = 21.192, all p values are less than .05. The null hypothesis which

states that there is no significant difference in the growth of small and medium

enterprises in terms of flexibility, competition, globalization, and employment when they

categorized according to age, was rejected.

The result simply implied that with regards to age, owners/ managers have

different perception in terms of flexibility, competition, globalization, and employment of

the growth of small and medium enterprises

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On the other hand, the Kruskal Wallis test results in Table 15 further revealed that

the managers/owners did not differ significantly in the factors of the growth of small and

medium enterprises in terms of innovation (X2) = 4287.00, the p value is greater than .05.

The null hypothesis which states that there is no significant difference in the growth of

small and medium enterprises in terms of innovation when they categorized according to

age, was not rejected.

The result simply implied that regardless of age, owners/ managers have similar

perception in terms of innovation of the growth of small and medium enterprises.

Table 4 Difference of the Growth small and medium enterprises in IIoilo City when
categorized according to age
Variables Mean Df X2 value Sig. value Remarks
Rank
Flexibility
Below 31 years old 55.55 3 31.320* .000 Significant
31-40 years old 93.55
41-50 years old 99.52
Over 50 years old 169.50
Competition
Below 31 years old 129.64 3 11.586* .009 Significant
31-40 years old 91.70
41-50 years old 107.06
Over 50 years old 66.50
Globalization

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Below 31 years old 109.05 3 10.077* .018 Significant


31-40 years old 88.37
41-50 years old 101.33
Over 50 years old 138.17
Employment
Below 31 years old 70.59 3 21.192* .000 Significant
31-40 years old 86.44
41-50 years old 103.99
Over 50 years old 154.50
Innovation

Below 31 years old 66.45 3 5.042 .169 Not Significant


31-40 years old 99.23
41-50 years old 102.65
Over 50 years old 114.67
* Difference is significant at .05 level of significance.
The Kruskal Wallis test results in Table 5 revealed that the managers/ owners

differ significantly in the factors of the growth of small and medium enterprises in terms

of flexibility (X2) = 11.450, competition (X2) = 10.999, globalization (X2) = 12.920, all p

values are less than .05. The null hypothesis which states that there is no significant

difference in the growth of small and medium enterprises in terms of flexibility,

competition, and globalization when they categorized according to years of operation,

was rejected.

The result simply implied that with regards to years of operation, owners/

managers have different perception in terms of flexibility, competition, and globalization

of the growth of small and medium enterprises.

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On the other hand, the Kruskal Wallis test results in Table 5 further revealed that

the managers/ owners did not differ significantly in the factors of the growth of small and

medium enterprises in terms of employment (X2) = 7.147, and innovation (X2) = 5.152,

the p value is greater than .05. The null hypothesis which states that there is no significant

difference in the growth of small and medium enterprises in terms of employment and

innovation when they categorized according to years of operation, was not rejected.

The result simply implied that regardless of years of operation, owners/ managers

have similar perception in terms employment and innovation of the growth of small and

medium enterprises.

Table 5 Difference of the Growth small and medium enterprises in IIoilo City when
categorized according to years of operation

Variables Mean Rank Df X2 value Sig. value Remarks


Flexibility
Below 5 years old 95.27 3 11.450* .010 Significant
5-10 years old 88.01
11-15 years old 116.67
16-20 years old 124.13
Over 20 years
Competition
Below 5 years old 114.19 3 10.999* .012 Significant
5-10 years old 97.15
11-15 years old 80.17
16-20 years old 111.75
Globalization
Below 5 years old 97.67 3 12.920* .005 Significant
5-10 years old 85.16
11-15 years old 118.28
16-20 years old 122.13
Employment
Below 5 years old 100.19 3 7.147 .067 Not Significant

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5-10 years old 88.27


11-15 years old 116.61
16-20 years old 106.88
Innovation
Below 5 years old 103.34 3 5.152 .161 Not Significant
5-10 years old 109.73
11-15 years old 87.00
16-20 years old 90.00
* Difference is significant at .05 level of significance.
The Kruskal Wallis test results in Table 6 revealed that the managers/ owners

differ significantly in the factors of the growth of small and medium enterprises in terms

of flexibility (X2) = 19.165, globalization (X2) = 39.949, employment (X2) = 7.860, and

innovation (X2) = 10.346, all p values are less than .05. The null hypothesis which states

that there is no significant difference in the growth of small and medium enterprises in

terms of flexibility, globalization, employment and innovation when they categorized

according to initial capital, was rejected.

The result simply implied that with regards to initial capital, owners/ managers

have different perception in terms of flexibility, globalization, employment, and

innovation of the growth of small and medium enterprises

On the other hand, the Kruskal Wallis test results in Table 6 further revealed that

the managers/ owners did not differ significantly in the factors of the growth of small and

medium enterprises in terms of competition (X2) = 2.335, the p value is greater than .05.

The null hypothesis which states that there is no significant difference in the growth of

small and medium enterprises in terms of competition when they categorized according

to initial capital, was not rejected.

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The result simply implied that regardless of initial capital, owners/ managers have

similar perception in terms competition of the growth of small and medium enterprises.

Table 6 Difference of the Growth of small and medium enterprises in Iloilo City when
categorized according to initial capital
Factors Mean Rank Df X2 value Sig. value Remarks
Flexibility
Below 3 million 90.55 2 19.615* .000 Significant
3 – 15 million 132.56
16 – 50 million 100.50
Competition
Below 3 million 103.03 2 2.335 .311 NotSignificant
3 – 15 million 89.83
16 – 50 million 111.75
Globalization
Below 3 million 85.78 2 39.949* .000 Significant
3 – 15 million 133.06
16 – 50 million 167.50
Employment
Below 3 million 95.64 2 7.860* .020 Significant
3 – 15 million 106.22
16 – 50 million 145.25
Innovation
Below 3 million 97.47 2 10.346* .006 Significant

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3 – 15 million 97.72
16 – 50 million 157.00
* Difference is significant at .05 level of significance.

Chapter V

Summary, Findings, Conclusion and Recommendations

The summary, conclusions and recommendations the summary of data, as well

the conclusions contingent on this study is presented. Recommendations as to future

actions with the data enclosed are also discussed.

Summary

This chapter summarizes the main findings, conclusion and recommendations

arising from the results of this study. The present study was undertaken to determine

affecting the growth of small and medium enterprises in terms of flexibility, competition,

globalization, innovation and employment, the respondents were composed of 200

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owners and managers of small and medium enterprises in Iloilo City . This study also

aims to determine how age, initial capital, sex and years of operation affect the

development of the said businesses. The factors were measured by an instrument which

is a questionnaire made by the researchers with questions related to the factors

influencing the growth of small and medium enterprises in Iloilo City.

The instrument used in gathering data for this study is the survey questionnaire,

the questionnaire contains the personal information data of the respondents and questions

related to the factors affecting small and medium enterprises in Iloilo City.The data

gathered were statistically processed and analyzed using statistical package for the social

sciences (SPSS) and were subjected to statistical tests such as frequency, percentages,

ranks, means and standard deviations for the descriptive data analysis while Mann-

Whitney u test, and Kruskal Wallis test for the inferential data analysis.

Findings

The findings of the study were as follows;

The demographic profile of the two hundred (200) owners and managers of small

and medium enterprise in Iloilo City are covered in this study, and study showed that 112

respondents or 56%of the has an age bracket of 41 – 50 yearsold, 62respondents or 31%

has an age bracket of 31 – 40 years old, 15respondents or 7% has an age bracket of over

50 years old, and11 respondents or 6% belongs to the age bracket of under 31 years old.

As to the initial capital, 145respondentsor 72% has a capital below 3 million pesos,

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45respondents or 23%with 3 – 15 million pesos, 10 (5%) with more than 15 million

pesos. When grouped according to sex 117 respondents or 58% are male owners and

83respondents or 42% are female owners. In terms of year of operation, 67 respondents

or 33% operates below 5 years, 68 respondents or 34% has been operating for the past 5 –

10 years and 45 respondents or 23% of respondents has been in operation for 11 – 15

years, and the remaining 10% or 20 respondents has been has been operating for more

than 15 years.

Study shows that the most influential factor of small and medium enterprises is

flexibility (M = 4.72,) followed by competition (M = 4.63), globalization (M = 4.58),

innovation (M = 4.57), and employment (M = 4.45). With the mean scores which

fell within the scale 4.21 – 5.00, shows that flexibility is the most influential factor

while employment is the least influential factor when taken as a whole.

The study showed that there are no significant differences in the most

influential factor affecting the growth of small and medium enterprises in terms of

competition, employment, flexibility, globalization, and innovation when the

respondents are classified according to age, initial capital, sex and years of

operation.

Conclusion

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Based from the aforementioned findings, the following conclusions were

drawn:

The study showed that there are no significant differences in the most

influential factor affecting the growth of small and medium enterprises in terms of

flexibility, competition, globalization, innovation and employment when the

respondents are classified according to age, initial capital, sex and years of

operationn .The study showed some interesting patterns about age, initial capital,

sex and years of Operation. Only a small percentage of businesses are run by

respondents from the youngest and oldest age brackets which are under 31 years

old or 6% and over 50 years old or 7%, only 5% has an initial capital of more than

15 million pesos, more businesses are owned and managed by male respondents

which is 58%, and only 10% of business have been operating for more than 15

years.

The most influential factor affecting the growth of small and medium

enterprises is flexibility, since it requires the overall logic and adaptability of the

said venture in a fast paced industrial environment to gain growth, while

employment has the least influential factor in the demand of manpower can be

easily fulfilled due to the convenience of modernization, qualified job seekers can

even be found online in less than 24 hours. But these factors are still considered as

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highly influential because they are the basic needs and the foundations of a

successful business venture, Competition give you awareness of other competitors,

employment gives you the manpower to turn ideas into actions, globalization

resonates with time and change, innovation provides creativity to create or satisfy

demands in an efficient way, it also resonates with the remaining factors in

considering their relationship with time and change, years of operation can define

the overall performance, stability, and potential growth of a business venture with

numbers to provide detailed analysis for owners to determine their gains and

losses as the time goes by.

Recommendation

Through the findings of the study, the researchers came up with the

following recommendation:

Owners of small and medium enterprises should have a flexible working system in order

to provide quality services when needed by customers which make the workforce flexible

enough to adapt to changing business conditions. To raise morale and job satisfaction:

flexible working increases the morale of employers to perform at their utmost best

because they feel they are treated as adults who have control of their life and their time

and they tend to perform at their utmost best when they are at work.

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Researchers try to gather numbers on the training and skills of the people

such as crews who deliver manpower and managers who spearheads a business

company, essential skills such as; communication and negotiation skills, advanced

budgeting and accounting and tips on how to stay in good standing with creditors

and suppliers are things that are not taught in school, yet these skills are utilized by

every successful leader in the world of business and we need numbers to generate

a more specific result on the attributes of every owner/manager.

Future Researchers due to the diverse factors and unique features of every

business venture that is related to this field, it is recommended that they should continue

to study what we have started because the study is very interesting; it allows people to see

solid numerical statistics in evaluating myth’s when it comes to business and

entrepreneurship.

49
University of San Agustin
Gen. Luna Street, Iloilo City, Philippines, 5000
Tel. No. (+63-33) 337-4841 to 44

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Appendices

58