Chapter II

THEORETICAL FRAMEWORK

This chapter presents the relevant theories, the related literature and studies, the

conceptual framework, and the hypothesis of the study.

Relevant Theories

Challenge and Support Theory. According to (Sanford, 1962), a balanced

quantity of challenge and support is needed for something to grow. Too much support and

the person will never grow and develop. Too much challenge will make a person frustrated

and quit trying. He believed that for growth and personal development to take place, a

person needs to have a challenge and support balance.

Sanford added a factor to this theory in 1966, the element of readiness. In short, an

individual cannot grow until they are physically and psychologically ready to grow. For

example, introducing a higher accounting lesson to senior high school students without

them learning the basics is not a great idea because they are not simply ready for it. The

situation is the same for a person planning to be an entrepreneur. He cannot start a business

without knowing the basic knowledge of how to run it in the first place.

The relation of this theory in our study is that the entrepreneurs of the sari-sari store

have to have a balance between facing challenges and support. Understanding that

challenges are one of the foundations of success is essential because one may not succeed

without having the honor to face the challenges given to them. Support coming from

families, friends, peers, or partners can also strengthen the foundation of success.
 The Iceberg Theory of Success. According to Mueller (2020), the excellent

metaphor for success is a much larger part hidden beneath the iceberg or what is visible

above the waterline. It means that the visible part of the iceberg is the success and

accomplishments that every one of us can see and the hidden part of it is the efforts to

achieve an outcome.

Success repeatedly dazzles people so that they will not notice the great efforts they

need to make to achieve a possibly great outcome. Hard work, failures, sacrifice,

determination, disappointment, and dedication make success possible in real life.

In our study, this theory makes us realize that every successful entrepreneur should

overcome challenges to reach their goals and make their dream, a successful entrepreneur,

come true.

The Wheel of Retailing Theory. According to McNair (1958), this theory

includes three cycles: the entry, trade-up, and vulnerable phases. In the entry phase,

retailers enter the market with low prices and affordable services to increase market

penetration. As the marketing mix improves and market share increases, retailers

provide more variety, better facilities, and better service, while typically increasing

prices. In the vulnerable phase, competition from new, more innovative businesses

causes retailers to lose both market share and profitability.

The relation of this theory in our study is the retailing itself since the sari-sari store

is a retailing business where retail is the sale of goods and services to consumers, as

opposed to wholesale, which is the sale of goods and services to businesses and institutions.
A retailer buys things in bulk from manufacturers, either directly or through a wholesaler,

and then resells them to consumers in smaller amounts for a profit.

Related Literature

Age. Entrepreneurship has become an attractive career option for both the young

and the old, but age has not been thoroughly examined as a variable of interest among

entrepreneurship scholars. In this review, we present 12 theoretical perspectives regarding

the effect of age on entrepreneurs' success and our critiques. We then present the results of

an exploratory meta-analysis with effect sizes from 102 samples. The results show that age

has a weak, positive linear relationship with overall entrepreneurial success, but it does

exhibit signs of a U-shaped relationship, with the relationship being negative among

younger samples but positive among older samples. The positive effect size becomes more

pronounced when more females are included in the sample. The effect size of age does not

differ by entrepreneurs' tenure running the firm. In terms of the type of success measures,

age hurts growth but has a positive effect on subjective success, firm size, financial success,

and no effect on survival. We compare our results with previous meta-analyses on

employees' age to show the uniqueness of entrepreneurs' careers and we offer suggestions

for future studies. (Zhao, 2020)

Sex. Perceptions and institutional frameworks can be barriers or facilitators to the

development of female entrepreneurship policies. Institutions rely on factual data on the

gender gap to evaluate their policies. However, the literature shows that the research and

institutions should also analyze the impact of social beliefs on the success of these policies

and initiatives. This study focuses on the impact of these perceptions in promoting female

entrepreneurship. Data were collected from 287 responses to a questionnaire from Spanish
women and men and were analyzed using multivariate regression analysis. The results

show that the perception of a lack of equality increases the gender gap even if there are

specific and effective policies in a society that attempt to eliminate the gender gap in terms

of the role of women in the home or positions of power. The main result is that these

perceptions ultimately affect women’s entrepreneurial intentions. The results have policy

implications for companies and public institutions willing to change the gender narrative

about entrepreneurship and design policies and initiatives that help women overcome

cultural barriers and effectively promote female entrepreneurship. (Illie et al., 2021)

Educational Attainment. According to Jimenez et al. (2015), we propose that

different levels of education vary between each other in terms of their impact and whether

we analyze either formal or informal entrepreneurship. Our results show that tertiary

education increases formal entrepreneurship as a consequence of higher self-confidence,

lower perceived risk, and enhanced human capital. At the same time, tertiary education

also hurts informal entrepreneurship as it increases awareness of and sensitivity to the

possible negative repercussions of this kind of activity. In addition, we show that the impact

of secondary education on formal entrepreneurship is positive as well, although in this case,

the effect on informal entrepreneurship is not significant. Even though secondary education

also increases awareness of the potential negative repercussions of informal

entrepreneurship, this effect is counteracted by a lack of management skills.

Physical Status of the Store. Based on the past literature regarding the factors of

loyalty, the study considers physical attractiveness and intellectual competence combined

with a traditional loyalty model in proposing its conceptual framework. It then estimates

the relevant parameters using a linear structural equation model (SEM). The subjects of the
study consist of consumers in Kaohsiung City, Taiwan, aged at least 20 years old who have

experience in engaging the services of real estate companies during housing transactions.

A total of 300 questionnaires were distributed, with 268 valid ones being returned, for a

valid return rate of 89.33%. The effect of physical attractiveness on satisfaction through

trust is more significant than its effect on satisfaction through intellectual competence.

These findings show that physical attractiveness, intellectual competence, and trust play an

important role in determining satisfaction and loyalty. Past studies related to loyalty

introduced various factors of loyalty; however, they rarely explored the effects of physical

attractiveness and intellectual competence on loyalty. That is the difference between this

study and past research. (Yeh et al., 2020)

Capital. Small and medium businesses (SMEs) play a critical role in the economy,

yet they are plagued by a shortage of finance. Determining the influence of cash sources

both inside and outside the firm is critical to the company’s survival and growth. As a

result, the purpose of this research is to determine the impact of capital on the growth of

SMEs in Vietnam. The key factors of this research are equity and liabilities, which are two

proxies for a firm’s capital. The data is based on the results of a survey conducted every

two years from 2005 to 2015, which included over 2,600 SMEs in 20 processing and

manufacturing industries in ten provinces and cities, including Hanoi, Hai Phong, Ho Chi

Minh City, Ha Tay, Phu Tho, Nghe An, Quang Nam, Khanh Hoa, Lam Dong, and Long

An. The findings show that characteristics such as equity capital, total workforce growth

rate, and male entrepreneurs have a positive impact on enterprise growth, whereas

liabilities, firm age, and export hurt enterprise growth. The study has demonstrated that
equity has a positive impact while liabilities hurt the growth of Vietnamese SMEs. (Ha et

al., 2021)

Location. According to Luthor (2019), research has shown that the location of a

business is one of its most important factors for success. The location has an even larger

effect on microentrepreneurs, those entrepreneurs opening a small-scale business

employing less than nine people. The importance of location strategy is especially

important for these small businesses because it impacts whether enough profits will be

generated to sustain the business. The importance of location in business success cannot

be understated. The location of the business positions it not only to attract a customer

base but also to attract the right sort of talent to make the business a success. A business’s

location also helps it create a brand and image since there are always parts of a city that

carry a reputation, whether it is a reputation for simple living or a reputation for luxurious

extravagance. Placing your business in a part of town that reflects your brand and

products can impact the success of your establishment.

Store Debtor. This research investigated the impact of debt in a sari-sari store in

Del Pilar Castillejos, Zambales. The research survey respondents were composed of twenty

(20) sari-sari store owners. Based on the summary of findings, the researcher concluded

that the store owners believe that the impact of debt on their business is the possibility of

bankruptcy, lessening their business income, their business will be less productive, their

business will not grow and their business will be stable. Some of the store owners limit the

amount of debt for every customer for them to minimize the possibility of bankruptcy of

their business. The debts have a big impact on a business, especially in a small businesses

like sari-sari stores. Some of the debtors did not pay well and those debts reduced the
progress of the business. The most preferred limited amount of some store owners is one

thousand (1,000) to two thousand (2,000) pesos for every customer. Debts have a big

impact, yet they should have some strategies or solutions to help the business grow. The

success of the business is not all about having a lot of profit for a day; it is about how the

owners manage it. Listing the names of the creditors, the value of their debts and the date

when they borrowed is already used in most of the sari-sari stores in Del Pilar Castillejos,

Zambales for them to remind the creditors about their past or new debts. (Gonzales, 2019)

Debt. Small and medium-sized enterprises (SMEs) are the backbone of the Asian

economy. They make up more than 96% of all Asian businesses, providing two out of three

private-sector jobs on the continent. Therefore, it is vital for Asian economies’ economic

success that they have fully functioning support measures for SMEs. However, SMEs face

major challenges in accessing cheap finance, mainly because of the asymmetric

information problem between suppliers and demanders of funds and the high transaction

costs. These lead to more collateral requirements for lending to SMEs with higher lending

interest rates, which hinder their growth. As most Asian countries are bank-dominant

economies, capital market financing is not a realistic option for SMEs. Therefore, we need

to look for solutions that make bank lending to SMEs easier. This study will highlight the

difficulties of SMEs in accessing finance and provide measures for mitigating them. The

remedies proposed in this paper are the development of credit information infrastructures

for SMEs and the utilization of credit-rating techniques for SMEs to address the

asymmetric information problem and the development of a sustainable credit guarantee

scheme to solve the collateral issue of the SMEs and ease they are assessed to finance.

(Yoshino & Taghizadeh-Hesary, 2018)

 Competitors. The retail industry is the fastest growing industry in India

contributing to 10 percent of the nation’s GDP. It is also standing among the top five retail

industries in the world. The industry consists of both organized and unorganized retailers.

A major portion of the industry is the small retailers who do their business without proper

knowledge and skills but to earn a living. With the coming up of FDI in retail and the entry

of giant companies into the field, many small retailers started to lose their profits. Small

retailers are considered to be the backbone of every industry as they help in developing the

economy by bringing balanced regional development, upholding traditional values, and

also developing small industries. Therefore, it is important to protect these small

unorganized retailers. The major problems faced by small retailers include lack of proper

knowledge, lack of finance, lack of technical and marketing skills, financial instability, and

competition from big and foreign retailers. Various strategies such as better customer

relationships, reservations for retailers, use of modern technologies, and strong retailer

associations can be implemented to develop the retailers in India. The government should

also take steps to ensure that the small retailers are protected and made competent to

perform their business. (George, 2019)

Decrease in Demand. Due to the rapid change in customer demands and needs,

manufacturers are increasingly shifting from mass production to mass customization. The

product platform strategy, which is one of the enablers of mass customizations, has been

implemented by many companies to offer a wide range of products that belong to a family.

Recently, a new platform approach was developed where an optimal platform is formed

for a product family and is customized for different variants by adding, removing, and/ or

substituting platform components to form product variants as orders are received. In this
paper, the effect of product platform design and customers’ demand on the production cost

is investigated using Discrete-Event Simulation (FlexSim). The product platform and the

product platform scalability concepts are examined and compared. The findings of this

research demonstrate that effective platform implementation has a direct effect on the

overall production costs as well as improving customer satisfaction by offering the desired

level of customized products. (Aljorephani & Elmaraghy, 2016)

Handling Money. Small businesses are vital for economic development and

employment generation. The implementation of sound cash management practices is

essential to ensure profitability. The study aimed to identify the impact of cash

management on profitability. This study adopted a correlational research design. The

purposive sampling method was adopted while undertaking research. 80 samples were

considered while collecting data. The sample structure consisted of small and medium

manufacturing businesses in the Kirtipur Municipality. Owners of such enterprises were

taken as a sample because they can better understand cash management. Data were

collected using five-point Likert Scale Questionnaires. Data were analyzed using mean,

correlation, and regression models. The study found that Cash management has an

insignificant but positive effect on profitability. It clarifies that conversion cycle, cash flow,

and inventory management positively affect profitability but the effect is nominal. (Pandey,

2019)

Pricing Strategy. Price is a critical component for any business and can be crucial

in the survival of the business. If the price is not set in line with the selected target market

it can negatively impact the product and the company’s profitability. The main goal of any

profit-seeking organization is to make a profit and to achieve this goal all areas related to
the management of the product, costs, and the setting of the price need to be managed

correctly. The primary aim of this study was therefore to investigate the factors considered

by small business enterprises (SMEs) when developing their pricing strategies. To address

this problem adequately, the research methodology was based on the primary data collected

from South African SMEs. As SMEs show common traits all over the world, it is accepted

that any findings will be universally applicable. A questionnaire was distributed to 88

SMEs to gather relevant data regarding factors considered when determining prices. The

data were quantified and analyzed by examining the frequency of occurrences and the

importance of the problem. The study found that SMEs generally agree that price setting

is influenced by competitor information and macro-environmental factors such as fuel

prices and inflation. There was a general agreement amongst the SMEs that consumer

relationships and the benefits that they, the consumers enjoy from the product as well as

product performance are important aspects to consider when determining prices. (Cant,

2016)

Choice of Product. According to Storenvy (2017), sales success requires offering

the right product in the right place at the right time and for the right customer. The right

product selection powers energetic growth not only of large companies but propels small

companies, too. Correct product selection and stock are crucially important for a retailer.

Nobody can offer the customer everything at once, but the available product selection

should provide sufficient alternatives. If a client seeking a dress does not find an

appropriate one in red, there should be an option to choose a blue one instead. A retailer

can increase the number of buying customers by changing and improving the product

selection. Selection corrections assist the customer in finding the product they were looking
for or a sufficiently similar one that satisfies their needs, says Harvard Business Review. It

is advisable therefore to analyze the buyer’s critical decisive factors while in the shop –

product price, brand, size, taste, color, etc. Also, it would be wise to think about the

alternatives the customers could choose from if they fail to find the perfect product.

Related Studies

This paper magnified the stories of success and failures of women micro-

entrepreneurs in managing their ‘sari-sari’ stores. Results revealed that new investments,

enhanced family income, productivity, and resourcefulness were the stories that they

highlighted as a success. They also revealed that failures framed them to be determined,

faithful, diligent, and optimistic. Lastly, they shared significant insights that women

entrepreneurs must be business-oriented, develop people skills, and employ strong

willpower. (Gano-An & Gempes, 2020)

This study identified the challenges faced by entrepreneurs of sari-sari stores to

overcome the said gap. The study showed that the alternative action of the respondents if

ever they experience loss in operating sari-sari stores is that they will use their personal

savings to start again. The challenges faced by entrepreneurs of sari-sari stores contain four

(4) categories known as location, financial, inventory, and customer-related challenges.

(Olgasan et al., 2019)

The main problem of the study was to find out the attitude of the sari-sari store

owners towards microfinancing. The result shows that sari-sari store owners have a positive

attitude towards microfinancing, and it helps them in their business and lives. It also shows

a significant difference between the demographic profile of the store owners and their
attitude toward microfinancing and its perceived benefits in their businesses and lives.

(Cruzat et al., 2019)

The study investigated the problems that are perceived by immigrant spaza shop

owners as negatively affecting the performance of their businesses. The results showed that

the problems experienced by immigrant spaza shop owners include crime, xenophobia,

lack of sufficient finance, high competition, inability to speak the language, high cost of

operation, and poor location. (Fatoki, 2016)

Paradigm of the Study

Independent Variable Dependent Variables

The demographic profile of the
respondents in terms of:
• Age
• Sex
• Educational Attainment
The profile of the store affects the
operation of the business in terms of:
• Physical Status of the store
• Capital
• Location

Sari-sari stores owners approaches to

overcoming challenges in terms of:
• Debt/ Financial Support
• Store Debtors
• Competitors / Economic
Instability
• Decrease in demand

The significant relationship in

strategical management toward
business growth in terms of:
• Handling Money
• Terms and Conditions on Debt /
Not allowing credits
• Pricing strategy
• Choice of product
 Research Paradigm Figure shows the relationship between the profile of the

respondents to the profile of the store, approaches to overcoming challenges, and the

strategical management of the entrepreneurs of sari-sari stores in the selected township of

Bataan.

Hypotheses

There is a significant relationship between strategical management and business

growth.
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