Chapter 2

Review of Related Literature and Studies

In this chapter, the present study provided related literature and studies after the

in-depth search done by the researchers. The literature and studies were reviewed to

strengthen the data and information about the study. This study also includes the

synthesis of the state of the art, bridge gap by the study, theoretical framework and

paradigm, conceptual framework and paradigm that is needed to fully understand the

research study.

Related Literature

According to Investopedia (2018), microenterprise is a small business that

operates with fewer than 10 people and started with a small amount of capital. Most of

the microenterprise are specialize in providing goods and services in local areas. They

serve an important purpose in the improvement of the people’s quality of life in the

developing countries by producing goods and services to the people. Also,

microenterprise helps microenterprise owners and employees by providing them

additional income for their families. However, given the size and resources, micro

providers have limited access to financial advisors and expertise that help them better

manage the business that caused them to manage the enterprise on their own.

In the article of Michalowicz (2011), it was stated that microenterprises make up

the largest area of businesses in the world. It is considered as the backbone of the

country. Because of the growing population, the number of microbusinesses will continue

to grow. Engaging to microbusiness is a good option to generate income because it

involves low start-up cost, low overhead because owners do not worry on big payroll

each month and it is easy to tap into one of talents to capitalize on the business.

On the report of Thompson (2016), it was explained that poor people in the

developing world often lack access to safe places to keep their savings. They cannot

obtain credit to start business or to grow their own business. The poor do not have basic

services like insurance to protect themselves against drought and natural disasters. The

micro and small enterprises owned by poor often have little help in getting access to new

technologies or business networks that could improve opportunities to sell their products.

The microenterprises improve the lives of the very poor by helping them to protect

themselves against risks and illness through the income generated in running the micro

business.

The article of Roberts et al. (2018), explained that microbusiness provide an

average of 38 percent of owners household incomes. It create jobs that foster skill

development and employ local residents who are disadvantaged or excluded from

traditional labor markets. Microbusinesses has different roles in the community. They

provide products and services tailored to locale. They occupy vacant storefronts that

provide places for people in the community to meet. They stimulate inflow of community

resources and they become role models in supporting the future entrepreneurs. Because

microbusiness were highly local, owners rely heavily on local financial and network

resources. Poor communities often lack to local resources, preventing promising micro-

entrepreneurs from succeeding, and robbing communities of the benefits of the ideas and

efforts of thousands of promising entrepreneurs.

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 As stated by Chakrabarty (2011), microenterprise provides employment to the

people and also support industries by supplying raw materials, basic goods, finished

goods and etc. It plays a vital role in the economy of the developing nation. However,

engaging to the microenterprise has relatively higher failure rate because of the

inadequate availability of credit support system from to develop the business.

Microenterprise is the beginning of the process in achieving greater heights in the

business, if only given the support to build skills and knowledge levels of owners and

also the employees.

In line with the article of Fiala (2017), it was stated that across the developing

world, microenterprises offer important income generating opportunities for people with

limited formal employment options, but these businesses often struggle to grow and fail

to provide more than subsistence-level income for their owners. Lack of access to finance

and management ability are important constraints to microenterprise growth. Without

capital and appropriate skills, it is difficult for businesses to grow.

On the composition of Phansalkars (2018), it stated that encouraging and

financing micro-enterprises among the rural poor is today seen as a major livelihood

promotion method. Enterprise should be one of the sufficiently high social value

justifying public investment. Even though the microenterprise produces social good, it

must also offer sufficient individual benefit to a user of its product or service so that the

people will be willing to pay a fee. Livelihoods and poverty alleviation programs have

therefore taken promoting micro-enterprises of rural and urban individuals.

Based on the Association for Enterprise Opportunity (2013), microbusinesses are

well-poised to take advantage of the changes under way in our labor market and the

11
broader economy. With lower start-up capital requirements and lower educational

barriers than other sectors, microbusinesses will flourish with the participation and risk-

taking that are essential for success in the new economy. Microbusinesses not only

impact the livelihood of owners, they also lead to better outcomes for their families, local

communities, and entire regions, as well as the national economy. Microbusinesses can

provide opportunities for many individuals in society.

Related Studies

The study of Gomez et al. (2015), was designed as a qualitative research study to

illuminate how microenterprises contribute to the job creation and economic opportunity.

This research focused on the understanding the quality of the jobs provided by

microenterprise. Using the purposive sampling method, the researchers conducted 104

interviews with an open-ended questions that allowed for exploration of wide range issue.

A content analysis was used to search for overall patterns and themes among responses.

The report examined the contribution of these jobs to the workers’ quality of life by

providing meaning and purpose, positive engagement and involvement, and work

friendships. Most of the employees of microenterprise value their jobs as ways to support

their families and build their futures.

The purpose of the study of Silva et al. (2016), was to verify the influence of

microcredit on the development of microbusinesses and on the quality of life of the micro

entrepreneurs' families in the State of Minas Gerais, Brazil. The study developed a

quantitative research with a probabilistic samples consisting of 250 micro entrepreneurs.

Descriptive-statistical techniques and analysis of structural equation model were applied.

The collection tool used was a structured questionnaire which sought to understand the

12
respondents’ profile. The questionnaires was developed with a Likert Scale of 5 points-

strongly disagree (1) to totally agree (5). The study revealed that the factor business

management exerts positive influence on the quality of life of the micro entrepreneurs.

Respondents reported improvement in care with family clothing and hygiene, in the

purchase of suitable school supplies for their children, improvement in food and in the

possibility of enjoying leisure activities more frequently through the microcredit of the

micro business.

Another study conducted by Maseya (2015), aimed to determine the type of

impact that micro and small enterprises have on the livelihood of the low income

residents of the community. This study sought whether microenterprises could transform

the lives of people who rely on them for a living. A qualitative research design was used

to have an in depth information from the people who has relevant information for the

study. The study was also limited through the use of interviews in getting the relevant

information. The researchers used purposive and snowballing sampling method from the

population of the micro and small enterprises in Khayelitsa. Twenty-two (22) respondents

were interviewed and observed by the researchers in conducting the study. The data were

presented in a narrative analysis coupled with graphs and tables. The result of the study

concluded that microenterprises have positive impact on the livelihood of the low income

households. The income that was generated in the microenterprises were mostly used for

the household consumption. Most of the households were able to provide health care,

shelter, education for children and extended family members, food and household

property and some were able to purchase a vehicle.

13
 While on the study of Nabutola (2014), he investigated the factors influencing the

performance of micro, small and medium enterprises in the Central Business District

Bonguma County. The researchers administered questionnaires and also interview

schedule in getting information of the study. Descriptive resign was applied because

variables under the study have already occurred and beyond control. Through the

stratified random sampling, there was a total of 427 employees and owners/mangers that

were selected from the micro, small and medium enterprises in Bonguma. Data were

analyzed through qualitative and quantitative techniques. Based from the findings of the

study, one factor that influence MSME’s is age. MSME’s have relatively younger

employees and owners. Most micro and small enterprises are owned and mainly run by

people in their late 20s and early 30s which comprise of the youthful population. The

younger owner/manager has the necessary motivation, energy and commitment to work

and is more inclined to take risks that result to the improved performance of the business.

In accordance with Osunsan et al. (2015), their study sought to identify the effect

of the age of owners on the small scale enterprises performance in Kampala, Uganda. The

study adopted ex post facto, descriptive correlation, descriptive comparative and cross-

sectional survey design. The data were collected using the standardized and improvised

questionnaire to the 409 samples of micro and small enterprise owners in Kampala. The

researchers used the potent parametric statistical techniques such as one way ANOVA,

Pearson’s Linear Correlation Coefficient (PLCC) and regression analysis. The result of

this research study indicated that there were no correlations between age of the owners

and the performance of the business in Kampala. Better micro and small businesses were

not limited to certain age groups. The study concluded that the need to make resources

14
for business growth were both for young and old business owners. Regardless of the age

of the owners, they provide employment for the residents of a community for the success

of their business.

In the study of Kotur (2014), it was aimed to investigate the influence of age and

gender on the performance of the employees in the enterprises. It involved the use of

questionnaires as instrument in gathering information. Also, the study used empirical

testing of the problem statements set forth for the study. Based on the tabulations and

statistical tests, gender has a significant difference on the performance of the enterprises.

In addition, it was stated that globalization of business gives individuals equal

opportunity to work in different organizations. Both men and women compete for job

positions in a certain business. However, it was stated on the study that female workers

are more productive than males. But, even though male and female employees exhibit

different levels of performances at their work, they still have opportunity to work in

business.

Moreover, in the study of Shava et al. (2016), it was established the performance

of MSMEs differs significantly and assess the gender gap if MSME could be allocated to

gender differences in business related experience. The study used the descriptive research

design with the use of self-administered questionnaires in gathering data. In the data

analysis of the study, the researchers used the t-test and chi-square. T-test was used to

investigate whether being male or female had significant influence on the

microenterprises performance. The chi-square test was used to control the level of

business-related experience between genders to critically examine the association

between gender and performance. The study concluded that controlling the level of

15
business-related experience between male and female owners has no difference in the

performance of MSMEs. When other key factors such as managerial experience, prior

business ownership and industry experience of entity owners are also taken into

consideration, it would provide evidence to indicate the insignificant difference in the

performance of male and female-owned entities.

On the other hand, the study of Ibasco (2018), aimed to determine the role of

microenterprises to the entrepreneurial development in Daet, Camarines Norte. This

study used the descriptive research design that described the facts and characteristics of

the given population that also involved content analysis. Using the non-probability

purposive sampling method, there were a total of forty (40) respondents that were

registered micro entrepreneurs in Daet. The researchers used the unstructured interview

that answered by the respondents based on their experiences. This study dealt with the

qualitative data analysis that were expressed through words as a unit of analysis. In this

study, it was found that microenterprises has a role in the developing entrepreneurial

abilities, improving entrepreneurial service and providing employment. The average

years that micro entrepreneurs have been managing microenterprises was five years

which gave them background experiences regarding the field before they started their

own business Also, it was concluded that being engaged to micro businesses for a long

period of time gives knowledge, skills and experiences not only to micro entrepreneurs

but also to employees that helps them in running the business.

Another study of Radipere (2014), examined the effect that age and business size

have on the business performance. A structured research questionnaires was used to

collect data from the 500 MSME in retail industry through interviewer administrated and

16
self-administrated survey. An ex post facto and cross sectional design was used in this

study. The study assumed causality and statistical inferences about how the whole

population will be made based on a representative sample. The analysis of variance

(ANOVA) is the statistical method for testing the null hypothesis so that the means of

several populations are equal. The study concluded that number of years in business is no

longer a significant factor of a company. It was found that there was no significant

difference between the number of years in business and company’s performance. It was

determined that maturity of business was not based on the number of years in business of

owner/managers thus it was based on the effective used of employees.

Synthesis of the State-of-the-Art

The different studies and literature that found and reviewed had direct and indirect

similarities and differences that was relevant to the present study. The related literature

and studies focused on the different roles of microenterprises in the economy.

The article of Fiala (2017), Michalowcz (2011), Investopedia (2018) and the

study of Gomez (2015) stated that microenterprises help in creating income opportunity

to the community. Microenterprise contribute to the economy by giving the poor a chance

to engage in business and earn money for their families. It is similar to the present study

in terms of the objective that was assessing the impact of microenterprise to the lives of

the microenterprise’ employees in Mantagbac Daet, Camarines Norte.

On the article of Investopedia (2018), Roberts (2018), Phansakars (2018) and

Association of Enterprises Opportunity (2013) explained that microenterprises help in

improving the quality of life of the people in the community. The same with the study of

17
Maseya (2015) and Silva (2016) that aimed to examine the impact of microenterprise to

the livelihood of the micro entrepreneurs. It was similar to the current study as it focused

of the quality of life of the residents in Mantagbac but differs on the participants, locale

and the design used in conducting the study.

However, on the article of Investopedia (2018), Thompson (2011), Chakrabarty

(2016) and Fiala (2017) stated that microenterprises remain stagnant because of the lack

of access and support from the experts that could help in improving the enterprise. The

microenterprise help improving the life of the poor but with the lack of access to experts

prevent the business to grow. The present study differs as it focus on the positive effects

of microenterprise in the community.

The study of Nabutola (2014), Kotur (2014), Osunsan (2015), Shava (2016) and

Radipere (2014) focused on the factors that influence microenterprises’ performance such

as age, gender and the number of years in business of the micro entrepreneurs. The

present study was similar in determining the significant impact of the variable profile of

the respondents to the microenterprises. The study differs on the design used and

statistical treatment. The study also differs as it focused on the impact of microenterprises

to the quality of life of the residents in Mantagbac Daet, Camarines Norte.

Gap Bridged by the Study

The present study differs from the related literatures and studies that the

researchers had found and reviewed. There were no studies about the impact of

microenterprise to the quality of life of the residents of Mantagbac Daet, Camarines

Norte. The current study was different in terms of the locale where the study was

18
conducted. No studies similar to the current study in regards to the participants and the

research design used. Other studies also said to be different in a way that the

aforementioned studies focused on the different factors that affects the performance of

the microenterprises. The current study focused on the impact of microenterprises to the

quality of life of the employees.

Theoretical Framework

Keynes’ Income and Employment Theory was the basis of this study. The theory

supported the study as it focused on the interrelation factors that affect business. This

theory was composed of the concept about microenterprises.

John Maynard Keynes was a British economist who propounded his own theory.

In 1936, he brought out his famous book “General Theory of Income, Interest and

Money.” He was known for his economic theory which is Income and Employment

Theory that emphasized the relationship between the income output and employment.

This theory stated that an effective demand is equal to the income and as well as to the

employment and economic stability. This theory showed that economy in a certain

country could be in equilibrium even at less than full employment level and believes that

equilibrium level of income and employment is determined by aggregate demand and

supply. Keynes offers the thinking to every business entrepreneurs that if demand

increase, the business’ employment and income also increases.

The Income and Employment Theory support the study as it composed about the

concept between enterprises and the employment. Along with this theory, it formulated

the idea that it did not end on the relationship of the enterprise and the employment. It

19
was also conceptualized the effect in engaging to the enterprises to generate income for

the business owners and employees.

John Maynard Keynes’

Income and Employment
Theory

Microenterprise: Its
Impact to the Quality of
Life of the Residents of
Mantagbac Daet,
Camarines Norte

20
 Figure 1. Theoretical Paradigm.

Conceptual Framework

The study was conducted to know the impact of microenterprise to the quality of

life of the residents of Mantagbac Daet, Camarines Norte. The input was processed to

provide information about the respondents to find out the output of the study. The

researchers identified the profile of the respondents which was the residents of

Mantagbac who were employed in the microenterprises within and surrounding the

vicinity. The profile of the microenterprise employees distinguished in terms of their

age, gender, and the number of years working in the microenterprise.

The process used by researchers was through the survey method. The researcher-

made questionnaire was used to gather the data. These researcher-made questionnaire

contained questions that was answered by the respondents. The gathered data was

analyzed and interpreted through statistics to acquire relevant information for the study.

There was analysis of the data to evaluate the relationship between the microenterprises

and the quality of life of the residents of Barangay Mantagbac Daet, Camarines Norte.

After the study was conducted, the outcome of this research was booklet that

would be useful for the residents in the community. The booklet was compose of

21
information and recommendations to improve the quality of life of the residents in the

Mantagbac. The feedbacks of the study were the assessment and evaluation of the impact

of microenterprise to the quality of life of the residents of Mantagbac Daet, Camarines

Norte.

Input Process Output

Socio-demographic
profile of the
respondents in terms of:
a. Age
b. Gender
c. Number of Data Gathering Recommendation
years working Procedure
in the business  Researcher-
made Booklet that contained
questionnaire recommendations to
The impact of
the residents employed
microenterprise to the
in the microenterprises
quality of life of the Analysis of data and to improve their quality
residents of Mantagbac. interpretation of life.

The significant
difference between the
impact of
microenterprises to the
profile of the residents.

22
 Feedback

Figure 2. Conceptual Paradigm

Notes
Investopedia (2018). “Microenterprise.” Retrieved from https://www.investopedia .com/
terms/m/microenterprise.asp

Michalowicz M. (2011).” The Rise of The Micro-Enterprise and Why It Matters.”

Retrieved from https://www.americanexpress.com/en-us/business/trends-and-
insights/articles/the-rise-of-the-micro-enterprise-and-why-it-matters/

Thompson E. (2016). “Microenterprise Development.” USAID from the American

People. Retrieved from https://www.usaid.gov/what-we-do/economic-growth-and-
trade/microenterprise-development

Roberts P. et al. (2018). “The Macro Benefits of Microbusinesses.” Retrieved from

https://ssir.org/articles/entry/the_macro_benefits_of_microbusinesses#

Chakrabarty, K. (2011). “Microenterprise Development- path to creating MNC’s of

tomorrow.” Retrieved from https://www.bis.org/review/r111207b.pdf

Fiala N. (2017), “Growing microenterprises: How gender and family can impact
outcomes evidence from Uganda” Retrieved from: https://www.
ilo.org/wcmsp5/groups/public/ ed_emp/---emp_ent/docu ments/publi
cations/wcms_547454.pdf

23
Phansalkar S. (2017). “Why Rural India Needs to Widen Domain foe Microenterprises.”
Social Story. Retrieved from https://yourstory.com/2017/11/micro-enterprises-
rural-india/

Association for Enterprise Opportunity (2013). “Bigger than you think” Retrieved from
https://aeoworks.org/pdf/Bigger20Than%20You%20Think%20%20The
%20Economic%20Impact%20of%20Microbusiness%20in%20th%20United
%20States.pdf

Gomez L. et al. (2015). “Microbusiness, Gainful Jobs.” FIELD at the Aspen Institute.
Retrieved from https://assets.aspeninstitute.org/content/uploads/2014/05/
GainfulJobs.pdf
Silva W. et al. (2016). “Microbusiness Development and Quality of Life of Micro
Entrepreneurs' Families.” Retrieved from http://www.scielo.br/scielo.php?
script=sci_arttext&pid=S1678-69712016000400176

Maseya, E. (2015). “The Impact Assessment of Microenterprises on the Livelihoods of

the Low Income Households in Khayelitsa.” Retrieved from file:///C:/Users/
admin/Downloads/Maseya_e_ma_ems_2015%20(9).pdf

Nabutola, J. (2014). “Influence of Micro Small and Medium Enterprises on

Improvement of Service Delivery in Central District Bungoma County.”
University of Nairobi Retrieved from file:///C:/Users/admin/Downloads/orca
_share_media1550585892420.pdf

Osunsan O. (2015). “Owner/Manager Age and Performance of Small Business

Enterprises in Kampala, Uganda.” Retrieved from https://www.research
gate.net/publication/308801939_OwnerManager_Age_and_Performance
of_Small_Business_Enterprises_in_Kampala_Uganda

Kotur, B (2014). “Influence of Age and Gender on the Performance.” retrieved from
http://iosrjournals.org/iosr-jbm/papers/Vol16-issue5/Version-3/O0165
397103.pdf

Shava H. et al. (2016). “Influence of gender on SME performance in emerging

economies.” Retrieved from https://actacommercii.co.za/index.php/acta/
article/view/408/599

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Ibasco J. et al. A Thesis for the Practical Research. “The Role of Microenterprises to the
Entrepreneurial Development in Daet, Camarines Norte.” (p. 203).

Radipere, S (2014). “The role of age and business size on small business performance
in the South African small enterprise sector.” Retrieved from:
https://businessperspectives.org/images/pdf/applications/publishing/templates/arti
cle/assets/5920/PPM_2014_04_Radipere.pdf?fbclid=IwAR1ALgyn0dlYju8wccrr
A_lXrrsWncwvZcP76xuiOlNPOfTZqJI3qw5HpowY

Encyclopedia Britannica (2018). “Income and Employment Theory.” Retrieved from

https://www.britannica.com/science/income-and-employment-theory

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