Challenges faced by Micro Enterprises in Binalbagan: An exploratory study

A Research Study Presented to Carlos Hilado

Memorial State University

In Partial Fullfillment of the Requirement in Business Research

(BUSRES)

Presented by:
Caalim, Nierose L.
Dela Torre, Rodica G.
Delgado, Pamela Joy I.
Jundos, Mary Cris G.
Olivos, Kimberly V.
Piorque, Jeah C.
Talaban, Jeanzhi N.
Udto, Erika C.

Presented To:
Table of contents
Page
Title page
Approval Sheet
Acknowledgement
Abstract
Table of Contents
List of Table
List of Figures

Chapter 1: INTRODUCTION
Background of the study
Statement of the problem
Hypothesis
Theoretical framework
Conceptual framework
Significance of the study
Scope and limitations of the study
Definition of terms

Chapter 2: REVIEW OF RELATED LITERATURE

Chapter 3: METHODOLOGY
Research Design
Respondent of the study
Data gathering instrument
Data gathering procedure
Dana analysis Procedure
Ethical consideration
Background of the study

Micro enterprises, defined as small businesses with fewer than 10 employees,

and is started with a small amount of capital advanced from a bank or other

organization. There is growing recognition of the important role micro enterprises

play in economic development. They are often described as efficient and prolific job

creators, the seeds of big businesses and the fuel of national economic engines. Most

micro enterprises specialize in providing goods or services for their local areas. These

businesses serve a vital purpose in improving the quality of life for people in

developing countries, and generally provide a product or service in their communities.

Micro enterprises not only help improve the quality of life for business owners, but

they also add value to the local economy. They can boost purchasing power, improve

income, and create jobs (Catalano, 2023).

Micro, 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 (SEPO, 2012).

In Binalbagan, a municipality known for its vibrant entrepreneurial activities,

micro enterprises form the backbone of the local economy. These small-scale
businesses, often run by individual entrepreneurs or small groups, are essential for

driving economic growth and enhancing the overall well-being of the community

through creating jobs, generating income, and promoting entrepreneurship. Despite

their important impact, micro enterprises in Binalbagan faced a countless challenges

that hinder their growth and sustainability. These challenges may include limited

access to financial resources, market constraints, stiff competition, inadequate

infrastructure, regulatory barriers, and skills gaps among entrepreneurs.

Understanding the specific challenges faced by micro enterprises in Binalbagan is

pivotal for developing targeted interventions and support mechanisms to address their

needs effectively.

Again, from an economic perspective, however, micro enterprises are not just

suppliers, but also consumers; this plays an important role if they are to position

themselves in a market with purchasing power: their demand for industrial or

consumer goods will stimulate the activity of their suppliers, just as their own activity

is stimulated by the demand of their clients. Demand in the form of investment plays a

dual role, both from a demand-side (with regard to the suppliers of industrial goods)

and on the supply-side (through the potential for new production arising from

upgraded equipment) (Berry et al., 2002).

The reason why the researchers will conduct this study is in order to know the

challenges faced by micro-enterprises in the municipality of Binalbagan. This study

will find out the various challenges faced by micro-enterprises.

Statement of the problem

This study aimed to determine the challenges faced by micro-enterprises in

Binalbagan.
Specifically, this study sought to answer the following questions:

1. What is the profile of the respondents in terms of:

a. Age
b. Gender
c. Socio-economic status
d. Educational attainment
2. What is the level of performance of the respondents when facing the
challenges in terms of:
a. Knowledge
b. Skills
c. Attitude
3. What are the primary challenges faced by micro enterprises in Binalbagan
according to:
a. Sex
b. Age
c. Type of business
 Statement of the Problem

Micro-enterprises, characterized by their small scale and limited workforce,

form a crucial component of Binalbagan’s local economy, contributing
significantly to job creation, income generation, and entrepreneurial
development. Despite their pivotal role, these micro-enterprises encounter
numerous challenges that impede their growth and sustainability. This
exploratory study aims to identify and understand the specific challenges faced
by micro-enterprises in Binalbagan.

Objective of the Study The objectives of this study are as follows:

1. To systematically examine the operational challenges experienced by micro-
enterprises in Binalbagan, including but not limited to:
a. Limited access to financial resources
b. Market constraints
c. Stiff competition
d. Inadequate infrastructure
e. Regulatory barriers
f. Skills gaps among entrepreneurs

2. To assess the economic impact of these challenges on micro-enterprises,

considering factors such as:
a. Employment generation
b. Income generation
c. Purchasing power
d. Entrepreneurial development

3. To propose targeted interventions and support mechanisms based on the

identified challenges to enhance the growth and sustainability of micro-
enterprises in Binalbagan.
Theoretical Framework

The finance gap theory and the resource dependency theory will form the theoretical
framework of this study.

Finance Gap Theory

The finance gap theory, as postulated by Bolton (1971), states that the components-
knowledge gap supply gap are the two sets of challenges faced by SMMEs. Bolton
(1971) points out that SMMEs lack knowledge about available sources of external
finance and that once these are determined, SMMEs have trouble satisfying the loan
requirements from the external financier. Furthermore, external financiers do not
understand the entrepreneur and their small business venturing (Bolton, 1971). This
means that the only possible way that SMMEs can raise capital is through personal
savings, friends, and family members. Additionally, since both their venture capital
and sales value are small as compared to operating costs, they face challenges in
maintaining the business resulting in eventual collapse of the SMMEs.

Resource Dependency Theory

The central premise of the resource dependency theory by Pfeffer and Salancik (1978)
is the relationship between a firm and a set of stakeholders in the business
environment. Nevertheless, the focus is on the firm’s ability to access resources from
other stakeholders in the business environment and describes how resource scarcities
force firms to pursue new innovations that use alternative resources. The theory
further postulates that SMMEs’ survival depends on the firm’s ability to acquire and
retain resources from stakeholders within the task environment (Dunn,2008). The
theory suggests that firms must aim to reduce or increase its level of dependency
from other external actors through alliance and joint ventures. In addition, the theory
can be interpreted to explain how SMMEs might pursue direct and indirect markets of
internationalisation to reduce exposure to home markets which may be undesirable
due to high market saturation, production costs and instead focus on other more
attractive national markets (Guo & Acar, 2005).
Conceptual framework
Significance of the Study

Understanding the challenges faced by micro-enterprises in Binalbagan is crucial for

informing policy interventions, support programs, and initiatives aimed at fostering a

conducive environment for their development. This study seeks to contribute valuable

insights to local government bodies, policymakers, and organizations involved in

economic development, with the ultimate goal of enhancing the resilience and success

of micro-enterprises in the municipality. By addressing these challenges, the study

aims to promote sustainable economic growth, job creation, and improved quality of

life within the local community.

Scope and Limitations

This study focuses specifically on micro-enterprises in Binalbagan, considering a

range of sectors such as retail and services. The research will not delve into

macroeconomic factors but will concentrate on the micro-level challenges faced by

individual entrepreneurs or small groups. The findings of this study aim to be

applicable to similar localities facing comparable economic contexts and challenges.

Definitions of Terms

Micro Enterprises. Are small businesses that employ a small number of employees

and have relatively low annual revenue. A common definition of a microenterprise is

a business with less than 10 employees. Micro enterprises often operate in industries

such as retail, service, agriculture, and manufacturing. These small businesses play a

crucial role in the economy by creating jobs, driving innovation, and contributing to

local communities.
Pivotal/crucial role. Is one that is essential to the success of a particular situation or

process. It is a position that has a significant impact on the outcome and cannot be

easily replaced or disregarded. A person in a pivotal role holds a key responsibility in

making important decisions or taking necessary actions.

Market Constraints. Refer to factors that limit the ability of businesses to operate

effectively within a particular market. These constraints can be internal or external

and may include factors such as government regulations, limited access to resources,

high competition, economic conditions, and social factors.

Stiff Competition. May be tough to navigate, but it also presents opportunities for

growth and success. It's all about how businesses choose to approach it and use it to

their advantage. By staying focused, staying ahead of the curve, and continuously

striving for excellence, businesses can thrive in even the most competitive of markets.

Inadequate Infrastracture. Can lead to a host of problems, including traffic

congestion, limited access to essential services, and hindered economic growth.

Poorly maintained roads, bridges, and public transportation systems can result in

higher maintenance costs and decreased safety for residents. Additionally, inadequate

infrastructure can limit the ability of businesses to transport goods and services

efficiently, impacting overall productivity and economic competitiveness. It is

essential for governments and communities to prioritize investment in infrastructure

to ensure the long-term well-being and success of the population.

Regulatory Barriers. Refer to government regulations and policies that create

obstacles for businesses and organizations to operate and compete in a particular

industry or market. These barriers can include high licensing fees, strict certification

requirements, complex approval processes, and restrictions on foreign ownership or

investment. Regulatory barriers can limit competition, hinder innovation, and stifle
economic growth. Businesses may struggle to navigate and comply with these

regulations, leading to increased costs and decreased efficiency. To address regulatory

barriers, policymakers may need to streamline regulations, improve transparency, and

create a more business-friendly environment.

Employment Generation. Refers to the process of creating job opportunities and

increasing the number of people who are employed in a country or region. This can be

achieved through various means, such as promoting economic growth, investing in

infrastructure, supporting small and medium-sized enterprises, and providing

vocational training and education programs.

 CHAPTER III METHODOLOGY
Research Design
Respondent of the Study
Data Gathering Instrument
Data Gathering Procedure
Data Analysis Procedure
Ethical Consideration
 References
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