ANALYSIS OF ENTREPRENEURSHIP ECOSYSTEM IN

NARRA, PALAWAN, PHILIPPINES

Darwin O. Aniar, MAEd

Department Chair for Business

Palawan State University Narra Campus

ABSTRACT:

Entrepreneurial ecosystems are defined as a set of independent actors and factors

coordinated in such a way that they enable productive entrepreneurship within the
economy. Entrepreneurial ecosystem is important in entrepreneurship education since it
represents the real world an entrepreneur would thrive after graduation. This paper
analysed the entrepreneurship ecosystem in Narra, Palawan, Philippines.
Entrepreneurship Education model by Daniel Isenberg was used as framework of the
analysis. The study gathered the opinion of different stakeholders, verified it through
observation and focus group discussion to create a picture of the entrepreneurship
ecosystem in the community, point out critical factor that affect both the entrepreneurship
education and the ecosystem and propose action to enhance it. It revealed that marketing
is still weak. There is no available expertise in productizing, customer network is limited
to traditional manner. Distribution channels are limited to local stores and pasalubong
centers. There is available skilled and unskilled workers and some serial entrepreneurs.
Later generation family members are no longer involved except those belonging to
Filipino-Chinese and Maranaw families and those engaged in construction business.
Educational institutions at secondary and tertiary levels are offering entrepreneurship
courses. Telecommunications and energy are present but delivery of such service is
unstable. Transportation and logistics are available. There is a very limited clusters and
support services such as legal, accounting, investment banking and technical advice.
Promotion of entrepreneurship, business plan contest, conferences and associations are
not present except in the university offering entrepreneurship degree. Tolerance of risks,
mistakes and failure is very low. The practice of innovation, creativity and
experimentation is seldom seen. Entrepreneurs are not celebrated compared to other
professions. Success stories of self-made entrepreneurs are widespread. Financing is
available through microfinance companies and family and friends. The government is
extending very little support in form of funding to promote entrepreneurship.

KEYWORDS: Entrepreneurship ecosystem, entrepreneurship education, markets, human

capital, supports, culture, finance, policy

INTRODUCTION
 “At a time when society’s biggest problem is youth unemployment, businesses

and governments must work together to help young people develop an entrepreneurial

mindset. That means fostering a culture which supports young people to take risks, set up

businesses, create jobs and become masters of their own destiny. Whether it’s through

finance, mentoring, incentives or training, we must all play our part so that this

generation can achieve its full potential. The time to act is now.” (Ernst and Young,

2013).

The above statement is true and timely. It is about time that we train job provider

than produce job seeker. And the answer to the noble goal is entrepreneurship education.

Entrepreneurship Education is the presence of contents, methods and activities supporting

the creation of knowledge, competencies and experiences that make it possible for

learners to initiate and participate in entrepreneurial value creating process. In its broad

sense, its end goal is to give students the attitudes, knowledge and skills to act in an

entrepreneurial way (Ajagbe, 2014).

In the Philippines, Entrepreneurship Education is being taught at secondary and

post-secondary levels as provided in the Youth Entrepreneurship and Act of 2013. In

tertiary education, it is recognized as a distinct field offered in higher education

institutions. Such offering is governed by Commission on Higher Education (CHED)

Memorandum Order No. 18 series of 2017 providing Policies, Standards and Guidelines

for Bachelor of Science in Entrepreneurship lays down the program outcomes of

Entrepreneurship and the penultimate required outcome is for the students to set up their

own business and practice social responsibility.

 In the Philippines, majority of graduates of Entrepreneurship become employees.

The national average of graduates who became employees is 93% (Gatchalian, 2016)

while PSU Narra graduates’ average is 87% (Aniar, 2014). This is alarming because the

objective of the program is developing entrepreneurs that would provide employment not

seek it.

Entrepreneurship education in the Philippines may be considered as a new and

nascent education discipline, where the academic community is only getting to

understand better how entrepreneurship education works (Lopez, A. 2016).

The reason for the low rate of students going into business after graduation is that

their university education did not prepare them well; (Del Rosario, 2012); there is no

clear business opportunity after graduation (Sanchez, 2010); the situation after

graduation is not conducive to start a business (Junio, 2010); they lack financial capital

(Aniar, 2014); the bureaucratic requirements prevent them from starting their business

(Joya, 2012); and their parents are forcing them to seek employment instead of starting

business (Gapuz, 2011).

The above cases are good reasons to revisit the recent practice that we have in

entrepreneurship education. We must look at it at macro perspective. Entrepreneurship

education should be viewed differently since the old one is not producing results. For

education to be effective, it should simulate the real setting. Entrepreneurship education

should not be confined to instruction but the role of the academe is to create an enabling

ecosystem to help train entrepreneurs-to-be.

An interesting model is the entrepreneurship ecosystem. The concept of

entrepreneurial ecosystems has gained popularity in recent years due to mainstream

business books such as Feld’s (2012) Startup Communities and work by Daniel Isenberg

(2010) in Harvard Business Review.

The Entrepreneurship Ecosystem proposed by Isenberg has six domains; venture-

friendly markets for products; enabling policies and leadership; availability of

appropriate finance; conducive culture; range of institutional and infrastructural

supports and quality human capital were analyzed.

Although any society’s entrepreneurship ecosystem can be described using the

same six domains, each ecosystem is the result of the hundreds of elements interacting in

highly complex and idiosyncratic ways. Israel’s entrepreneurship ecosystem evolved in

the 1970s with no natural resources, military necessity, and far from markets for its

products. Ireland’s ecosystem evolved in the 1980s in the context of free education,

native English, foreign multinationals, and proximity to the European market. Taiwan’s

entrepreneurship ecosystem evolved in the 1990s in the context of a huge accrual of

highly successful Taiwanese expatriates in the US. China’s entrepreneurship ecosystem is

evolving now in the context of diverse regional policies and a somewhat (some would

argue, very) totalitarian political system (Isenberg, 2010)

The entrepreneurship ecosystem is summarized in figure 1. The six domains are

interweaving, each complementing one and the other in creating an enabling

entrepreneurship ecosystem.
 Figure 1

The Entrepreneurship Model by Daniel Isenberg

The purpose of the study is to gather data that would describe each of the

following domains;

a.) market
b.) human capital
c.) support
d.) culture
e.) finance
g.) policy.

Point out critical factors that can affect entrepreneurship education and

entrepreneurship ecosystem.

Propose specific program to enhance the ecosystem present in the community.

RESEARCH DESIGN
 The study, which was conducted from March 2016 to December 2017, used one-

on-one interview, focus group discussion and document analysis as well as program

evaluation. Participants of the study are home-grown entrepreneurs; alumni, students,

faculty and administrators of BS Entrepreneurship Program of Palawan State University

Narra; Local Government Official; and Financing Institutions in the locality broken down

as follows:

Table 1

Distribution of Respondents of the Study

Group No. of Participants

Home-grown Entrepreneurs 31
Alumni (PSU Narra BS Entrep) 28
Students (PSU Narra BS Entrep) 49
Faculty (PSU Narra BS Entrep) 6
Administrators (PSU Narra BS Entrep) 2
LGU Officials/Employees 7
Financing Institutions 9
TOTAL 132

RESULTS AND DISCUSSIONS

 Interview, FGD, document analysis and program evaluation revealed the

following:

The Entrepreneurship Ecosystem in Narra, Palawan, Philippines are characterized

by the following:

MARKETS

Early Customers

Expertise in productizing

There is lack of expertise in productizing. Although there are efforts in its infancy

stage from a university and the Negosyo Center to help productize concepts. These

efforts are not enough to radically affect the whole community. Start-ups would just rely

on the traditions they have learned from their ancestors and the community in producing

and selling their products.

Reference Customer

Reference customer are present sometime but their efforts to refer a certain

product is not consistent. The habit of referring product to other people is not enough to

help a new product sustain the competitive pressure.

Distribution Channels

Distribution channel is limited to the traditional way of displaying products in

local stores, public market and pasalubong centers. There are department stores in town,

though required by law to provide space for, do not cater to local product display because

of its astringent screening policies.

Networks

Entrepreneur’s network

Entrepreneur’s network is limited to family, friends and colleagues. There is no

deliberate effort to expand the said network for the sake of entrepreneurship. Trade

associations and business chambers are not present in the municipality. This limits the

entrepreneur’s potential to market their products beyond their immediate locality.

Diaspora network

All respondents mentioned that they have network outside their immediate

community but don’t maximize them to promote their products. This can be tapped as

potential market.

MNCs

Access to multinational companies is almost nil. With few exceptions of those

engaged in marine products, no local product has caught the attention of a multinational

company.

HUMAN CAPITAL

Labor

Skilled and unskilled

There are available skilled workers particularly in the field of farming and fishing.

Their experience in processing the produce is an advantage. There are also skilled labor

in the fields of ICT, machine operations, mining processes and other related skills.

There are sufficient unskilled labor available in the locality. This is attributable to

the limited employment opportunity in the locality.

Serial Entrepreneurs
 There are some serial entrepreneurs in the community. Most of them are those

students taking up entrepreneurship courses that are required to come up with certain

business as an academic requirement. Aside from the students, other groups where serial

entrepreneurs often rise are women in the community.

Later Generation Family

Later generation family members are more interested in choosing fields other than

business. Top choices are engineering, medicine, accounting and nursing. These field

(except accounting) are not related to their businesses. Except for Filipino-Chinese and

Maranaws, later generation family are no longer engaged in the business operations.

Those engaged in construction business is also an exception to the case.

Educational Institutions

General degrees (professional and academic)

The locality has 36 public elementary school; 8 private elementary schools; 10

public high schools; 5 private high schools; one college; one university and two technical

training school. This means that general and professional education is accessible in the

locality.

Specific Entrepreneurship Training

There is a university that offers full-fledged Entrepreneurship Degree. A college

and a university offers Business Administration Degree. The lone technical training

institution offers an entrepreneurship course on all its program. There are four (4) senior

high school that offers Accountancy, Business and Management track while all the senior

high school, both private and public offers Contextualized Entrepreneurship Course as

mandatory requirement.
SUPPORTS

Infrastructure

Telecommunications
The locality is served by the two major telcos (Smart and Globe) but its coverage

is limited to the central part of the municipality. There are areas that don’t have

telecommunication services. Although majority of the community is covered by the

services of the telcos. The signal is unstable. Internet is limited and very slow.

Transportation and logistics

The area is accessible through national road from Puerto Princesa City, the

island’s commercial hub. There is also an access road to Buliluyan International Port,

island’s gateway to Southeast Asia. The municipality is served by land transportation

from Puerto Princesa through buses and shuttle vans. Cargo trucks and jeepneys are

available for the purposes of transporting products.

Energy

The community is served by Palawan Electric Cooperative (local cooperative).

All barangays are covered but the power is unstable. Frequent blackout is a prevalent

problem for years now.

Zones, incubation centers, clusters

The concept of zoning, clustering and innovation centers are strange to the

community. There is no deliberate plan on the part of the government to develop such.

Although the Negosyo Center serves as mini-incubation center, its manpower, space and

facilities would not suffice to support the entrepreneurs in the area. The Department of

Trade and Industry, as part of enhancing competitiveness among industries are clustering

it but such is not felt in the community.

Support Professions

Legal

Seeking legal advice is uncommon. Small businesses do not value legal advice. In

fact, they don’t see it necessary. There are only two law offices in the community that

charges high consultation fees. There is no government effort to provide legal advice to

address business concerns of entrepreneurs.

Accounting

There is only one accounting office in the locality which was established in 2016.

Although there are lots of accountants in the community working in different agencies,

their services are not being offered to the public or the public don’t know that such

service is available. Some participants in the interview said that they go back to the

university and seek the assistance of their former accounting professors for accounting

matters.

Investment bankers

There are four rural banks in the area. But according to the interview, they don’t

entertain loans from start-up entrepreneurs. There is an existing Memorandum of

Agreement between Palawan State University Narra and Coop NATCCO SRT for the

granting of loan for entrepreneurship students undertaking practicum business. This is the

only case where a startup can avail of a loan.

Technical experts, advisors

Negosyo Center provides limited technical advice on supply sourcing and market

matching. But the advice is limited since there is no resident advisor/consultant. There is
an advisor who render technical advice only when he is in Narra. Faculty of PSU Narra

offer free consultancy to its students and alumni from time to time.

Non-Government Institutions

Entrepreneurship promotion in non-profits

There is no non-profit organization that promotes entrepreneurship.

Business Plan contests

Except for a class requirement in the university, there is no business plan contest

in the locality.

Conferences

There are regular conferences hosted by the Department of Trade and Industry

(DTI) Negosyo Center. The Entrepreneurship Department hosts the Annual

Entrepreneurship Summit that gathers experts and players of Entrepreneurship to discuss

recent trends and research findings in the field of entrepreneurship.

Entrepreneur-friendly associations

Except for the Young Entrepreneurs Society of Palawan State University Narra,

there are no other entrepreneur friendly association existing in the community.

CULTURE

Societal Norms

Tolerance of risks, mistakes, failure

There is a very low risk, mistake and failure tolerance. People would just opt for

employment because for them it is safer. They are assured of fixed periodic income

unlike venturing into entrepreneurship which is risky and income is uncertain.

Innovation, creativity, experimentation

Innovation and creativity is also low among the entrepreneurs. Majority still

practice the traditional way of doing things. They are more comfortable with the things

that are tested and they are afraid to innovate. Those who have acquired formal

entrepreneurship education are more inclined to be innovative and creative. They are

more experimental and tend to come up with innovative products/services.

Social status of entrepreneurs

The entrepreneurs are not celebrated. It is not look up to. It is not popular

compared to teaching, engineering, accounting or nursing. This leads to low morale

among entrepreneurs. The Entrepreneurship Department of Palawan State University

Narra have institutionalized the Outstanding Local Entrepreneurs (OLE) that recognizes

the achievements of the entrepreneurs in the community. Since the awards is in its infant

stage, this has not been recognized by the community.

Wealth Creation

Those who have ventured to entrepreneurship for a long period of time have

accumulated wealth enough to give them high regard from the society. The high regard is

because of wealth and not because they are entrepreneurs.

Ambition, drive, hunger

There is very little evidence of ambition, drive and hunger to do entrepreneurial

undertaking. People are complacent and contented with their current situation.

Success Stories

Visible successes
 There are dozens of home-grown entrepreneurs who really made it big. Stories of

self-made millionaires (billionaires) are known in the community. The study was able to

document 12 self-made millionaires whose story are very popular in town.

Wealth generation for founders

Founders of entrepreneurial business have generated wealth enough to give them

status symbol in the community. Most of them have generated income enough for them

to diversify their business. Study revealed that there are 14 families whose wealth can be

attributed to founding an entrepreneurial venture.

International Reputation

There is no apparent international recognition among the entrepreneurs in the

area.

FINANCE

Financial Capital

Micro-loans

There are five micro-finance company operating in the locality. They offer loan

packages ranging from 1-5% interest for business and agriculture loan. Aside from the

said companies, there are lots of usurious informal lenders that offer loan that offer

higher rate of 5 to 20%.

Angel Investors, friends and family

There are some few friends and family members who have helped somebody to

start their business through financial assistance but their number is very insignificant.

Twenty-nine of the respondents said that they were assisted by friend/family in setting up

their business.
Zero-stage venture capital

They are not present in the community.

Venture Capital funds

No venture capital funds circulate and/or available in the community

Private equity

Private equity is a rare thing although there are very few and exceptional cases.

Public capital markets

They are not available in the market.

Debt

Debt specifically allotted for entrepreneurial venture is sometimes present

especially during the election/campaign period. They are being used by politicians as

campaign collateral. These loans are most of the time non-interest bearing and payable

within five years.

POLICY

Government

Institutions (investment support)

The local government supports the Negosyo Center (established in July 2017), the

hub for market research, product planning, product matching, product development and

marketing for local entrepreneurs. The government is funding this center. The local

government provided the building and subsidizes the salary of the employees.
Financial Support (for R&D, Jump Start Funds)

There is no legitimate financial support for R&D, Jump Start Funds etc. The

financial assistance available from the government are those for academic scholarship,

burial and medical assistance. There were instances where livelihood assistance is

extended to certain beneficiaries.

Regulatory Framework Incentives (tax incentives)

The local government is not supportive of the incentives provided by law. For

example, the Barangay Micro Business Enterprise Law was not yet implemented in the

municipality. In fact, local businessmen were complaining because of very high permits

and licenses fees for registration and renewal of businesses. The municipality charges the

highest rate for permits and licenses in the province of Palawan (Average collection per

registrant is P18, 450.00 in 2017).

Leadership

Unequivocal Support

Support to promote and develop entrepreneurship in the community is not

evident. Those who want to start their entrepreneurial venture find it hard to set up their

desired businesses. It is because the leadership in the government is not recognizing its

importance.

Social legitimacy

There is no indication that the leadership promotes social legitimacy of

entrepreneurship in the community.

Open door for advocate

Although advocates for entrepreneurship are not barred from doing something to

promote the cause, there is no legitimate program that encourages its promotion.

Advocates would just do what they believe will help advance their beliefs. This often fail

because of standalone effort that is not sustainable.

Entrepreneurship strategy

No entrepreneurship strategy is manifested in the leadership of government. They

are still doing the traditional leadership strategy. Political leaders would invest

government funds on visible projects like roads, bridges and buildings since it can be

used easily during the campaign periods.

Urgency, crisis and challenge

There is no sense of urgency among the leaders that indicate their desire to

promote entrepreneurship at least soon.

CONCLUSION AND RECOMMENDATIONS

The entrepreneurship ecosystem in Narra, Palawan, Philippines is far from ideal.

Market is available but expertise in the field of productizing, distribution and access to

international arena are yet to be explored. The network is limited to family and friends

and expansion is not seen yet. Human capital is present both skilled and unskilled.

Academic institutions contribute to the development of entrepreneurial mindset through

entrepreneurship training in secondary and tertiary levels. Serial entrepreneurs are seen to

be appearing especially from those formally educated youth and women sectors. Later

generation families are becoming less interested in their businesses but Filipino Chinese

and Maranaws are continuously involved in family business. Infrastructure support have

lots of room for improvement. The value of support professions are not recognized thus,

their worth is not maximized. NGO’s promoting entrepreneurship are not around.

Activities like business plan competitions and conferences as well as entrepreneurs’

organizations are confined to academic world. The culture has very little contribution to

the ecosystem. Tolerance to risks and failure is still low. Innovation and creativity are

new to the people except those who went to formal schooling. Entrepreneurs are not

celebrated. There is no ambition among young people to become entrepreneurs. On the

contrary, success stories of self-made millionaires’ entrepreneurs are known in the

community. Financial support is limited to microfinance and informal lenders as well as

family and friends. Government policies are not supportive of entrepreneurial growth.

The entrepreneurship ecosystem existing in Narra, Palawan needs the support of

the government, academe and the private businesses. Financial and technical support
which is critical in developing entrepreneurs should become among the priorities of the

government. Private businesses should contribute by becoming distribution channels,

advisors and incubators. Academe should inculcate the value of support professions such

as legal advice, accounting and other technical fields.

A Board composed of businessmen, government and the academe is proposed to

be created. This board should be tasked to sit together and plan actions to enhance the

entrepreneurship ecosystem.
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