CHAPTER I

PROBLEM AND ITS SCOPE

INTRODUCTION

As the Philippines’ Education system is nearing to its implementation to the K to

12 program which aim to integrate a much higher level of education to the Filipinos

through a more cohesive and skill-based curriculum that caters to the needs of the level

of education which the Filipino youth needs. It offers four tracks to choose - Academic,

Technical-Vocational- Livelihood, Sports and Arts and Design, with each track having a

specialization strands. The Academic track includes three strands: Accountancy, and

Business Management (ABM); Humanities, Education, Social Sciences (HESS); and

Science, Technology, Engineering, Mathematics (STEM) (www.gov.ph/k-12/). With this

notion in mind, we cannot hesitate to ask questions regarding the effectiveness of this in

the Philippine setting especially in the Business sector.

This research tackles on a broader perspective of ABM students on how effective

an ABM graduate to the success of building a stable business establishment. As the

researchers are students also taking up the strand ABM which is leading to future

Accounting and Business Management careers such entrepreneurship and business

managing it is befitting to undergo in depth research of the said effectiveness. Since

Entrepreneurship has been the center of attention for researchers and economists for

the last few years (Hatten and Ruhland, 1995; Green et al., 1996; Alstete, 2002; Gurol

and Astan, 2006). One factor for this heightened interest is, that entrepreneurship plays

important role in boosting economic development. Entrepreneurship brings new life to,
and catalyzes the slow growing and stagnant economies. The contribution of

entrepreneurs to the economic growth and social development cannot be undermined

anywhere across the boundaries. For last couple of decades the importance of

entrepreneurship for economic health of a country is widely understood, as evidenced

by interest taken in establishing universities, colleges for imparting entrepreneurial

education, establishment of different supporting and facilitating authorities, and forums

and platforms at different national and international levels. Entrepreneurs play a key role

in economic growth and job creation of a country. Entrepreneurial education has been

argued as an effective way to promote and bolster the interest of entrepreneurship

among students. Exposures to this knowledge may instil positive attitudes towards

entrepreneurship among students (Basu & Virick, 2008). Entrepreneurship education

has been introduced since mid-1990s as an outcome of economic growth.

This study aims to identify the effectiveness of such strand to the success of

business. In today’s turbulent job market, starting and having own business venture is a

dream. Practitioners and experts from seventy countries around the world gathered to

address developmental challenges the countries faced with, tackling this with innovative

approach and incubation (Innovation and Venture Creation for Inclusive Development,

October, 2630, 2009). Global Entrepreneurship Monitor (GEM) study (Bosma and Levie,

2009) reported that entrepreneurial activities decline in most of the studied 54 GEM

countries in 2009; notwithstanding, about one third of the countries showed increased

entrepreneurial activities. Because of the benefits and advantages brought by

entrepreneurship especially in the economic growth. People are motivated to venture

the world of business, where there are lots of means in putting up a business but the
stability of the success of the business is a mere sight unto the unknown. Many

newspaper and magazine headlines (Connolly, 2009; Sayle, 1998) tell tales of business

owners who commit suicide because of business losses. These headlines possibly hint

at many other untold stories of broken spirits and wrecked lives. While curiosity and

personal interest might influence the choice of a thesis topic such interest of itself would

not be sufficient reason to make the topic worthy which requires an original and

adequate contribution to knowledge and should also be of practical significance. And so

the literature on entrepreneurship was explored. This exploration revealed a greater

focus on success and survival than on failure in entrepreneurial ventures (Shepherd,

2003). Moreover, the primary emphasis of those studies that have examined failure has

been on understanding causes of failure (Abdullah, Hamali, Deen, Saban, &

Abdurahman, 2009; Bruno, Mcquarrie & Torgrimson, 1992; Zacharakis, Meyer &

DeCastro, 1999). As Minniti and Bygrave, (2001) point out, this is indeed an important

area of investigation, as explication of reasons why businesses fail can improve the

probability of subsequent ventures succeeding. After all, as Lussier and Halabi (2010)

suggests every entrepreneur starts up a firm with high expectations of achieving

success. However, such motivation is sometimes not enough to “guarantee success” in

a venture (Sauser, 1987, p. 33). As shown in Hogarty (1993), starting a new business

involves major risk, and Holtz-Eakin (2000) makes clear that, despite enormous effort,

ventures do frequently fail. Indeed in the unstable, complex, global environment that

business have to face, it has become ever more challenging for ventures to survive and

achieve success, most especially when they have only the entrepreneur‟s own

resources and capabilities to draw on. This study will be valuable for entrepreneurs
having to deal with change, crisis and unexpected situations especially those who are

neither business degree holder nor having a single idea on how to handle a business.

Moreover, the study will deepen our understanding of learning in entrepreneurship

especially the managing of the business, by providing details of the extent of learning

that takes place, how and what kind of skills and knowledge entrepreneurs gain, in what

ways this learning is used, and whether the entrepreneur’s knowledge in starting up a

business. Though we know that the very process of entrepreneurship can be extremely

already stressful (Akande, 1994; Boyd & Gumpert, 1983). Quite often an entrepreneur

plays a pivotal role in making many varied everyday decisions relating to the venture

(Politis, 2005), and some of these decisions may have to be made in stressful,

ambiguous and unexpected situations. Thus, if an entrepreneur faced with a challenging

situation in relation to his/her venture were to lack the resilience to deal with it, then this

could result in ineffective decision-making, have a crucial impact on the performance of

the venture, and perhaps even threaten the venture‟s chances of survival. Moreover,

ineffective management of the stressful demands of a venture may also dent the

confidence of the entrepreneur, his/her intentions to be involved in an entrepreneurial

venture, and his/her willingness to take risks or appreciate new ideas in business

(Politis & Gabrielsson, 2009).

THEORITICAL BACKGROUND

Because this study explores the effectiveness of ABM strand in business

establishment, it is necessary to take a closer look at the theoretical basis beneath this

study. Being an entrepreneur/business owner and the factors that influences to the

success of the business are deeply interwoven. By having a profound understanding of

these theories can impact the lives of entrepreneurs and the business. To effectively

determine the optimum meaning of ABM strand and to business establishment, the

study is based on different learning theories.

The concept and theories of entrepreneurship evolved over more than two

centuries have undergone major changes. Over the years the social scientists have

interpreted the phenomenon of entrepreneurship differently in accordance with their

perception and economic environment. In fact, the concept of entrepreneurship is

complex in its content, and it is influenced by not only economical aspects, but also by

sociological, political, psychological, ethical, religious and cultural values. Two theories

shall be used in this study as it correlates to the study.

Thomas Cochran propounded a sociological theory of entrepreneurial supply.

The basic assumption is that fundamental problems of economic development are non-

economic, he emphasizes cultural values, role expectations and social sanctions are

the key elements that determine the supply of entrepreneurs. According to him, an

entrepreneur is neither a super-normal individual nor a deviant person but represents a

society’s model personality. Thus, the individual’s performance as an entrepreneur will

be influenced by his own attitude towards his occupation, the role expectations held by

sanctioning groups and the operational requirements of the job.

John.H.Kunkel has given a behavioral model which in turn begins with the

assumption that ‘man’s internal state is beyond the scope of presently available means

of measurement and objective analysis, and knowledge of it is largely unnecessary for

the explanation and prediction of behavior. According to this behavioral model, the
determinants of an individual’s activities are to be found largely in the conditioning

procedures-both deliberate and accidental to which he has been subjected in the past,

and in the sets of reinforcing and discriminative stimuli which became part of his

behavioral chains and are part of present social context. The relationship between the

social environment and the individual is reciprocal. Thus, entrepreneurship is basically

an outcome of the society and its expectations.

LEGAL BASES

This study is anchored in the following laws. Section 1, Article XII – NATIONAL

ECONOMY AND PATRIMONY of the 1987 Constitution mention that the state has a

Three-fold goal which is to a.) more equitable distribution of opportunities, income and

wealth; b.) sustained increase in the amount of goods and services produced by the

nation for the benefit of the people; and c.) expanding productivity, as the key to raising

the quality of life for all.

Also, the state shall promote industrialization and full employment that: a.) It

should be based on sound agricultural development and agrarian reform b). It should

be through industries that make full and efficient use of human and natural

resources. Industries should also be competitive in both domestic and foreign markets.

Furthermore, the State shall protect Filipino enterprises against unfair foreign

competition and trade practices.It is also stated the role of Private Enterprises which is

private enterprises, including corporations, cooperatives, and similar collective

organizations, shall be encouraged to broaden the base of their ownership.

REVIEW OF RELATED LITERATURE

According to Ponthieu and Insley (1996), "Small businesses constitute 97% of all

businesses in the United States and employ more than 58% of the labor force" (p. 35).

The small business sector is growing at a very impressive rate, with small businesses

making up more than 50% of the sales and products in the private sector (U.S. SBA,

1994). The importance of small businesses to the economy is quite evident. It has been

said that specific success strategies used in one business may not work for another; as

all businesses, like people, are different (Hand, Sineath, & Howle, 1987). There are so

many variables to sift through. It would appear that the majority of studies in this area

have found that most businesses that demonstrated success were found to have

characteristics or to use tools in three separate areas. These are characteristics of the

owners/entrepreneurs, demographic characteristics of the business, or strategic tools

used by the business. A study by Beckman and Marks (1996) found that business

experience was a factor in the success of small firms. Another study by Costa, 1994,

indicated that strategic planning contributes to long-running success for businesses.

Other factors for success include quality, customer focus, innovative marketing

practices, flexibility and employee empowerment (Zetlin, 1994). Filley and Pricer (1991)

defined several tools for small business success. These included good management

techniques, such as appropriate operating strategies, leadership and time management.

Other tools were good financial management and pricing strategies, motivational

strategies for employees, and ensuring only those employees with ability are hired.

Studies that have looked at appropriate management and financial planning and skill

development of managers were conducted by Ibrahim and Goodwin (1986), Montagno,

Kuratko, and Scarcella (1986), Hofer and Sandberg (1987), Lumpkin and Ireland

(1988), and Susbauer and Baker (1989). These studies also looked at environmental

factors and entrepreneurial characteristics as factors in business success. Ibrahim and

Goodwin (1986) stated that "Success in business is defined in terms of rate of return on

sales, and age or longevity of the firm" (p. 42). Cuba, Decenzo, and Anish (1983) and

Khan and Rocha (1982) also found that sales, profit, and longevity were important to

success. Hofer and Sandberg (1987) noted that high quality services or production was

the key to success for firms and was directly related to effective management and

planning, which relied upon effective management decisions. According to Lussier

(1996), "There is no generally accepted list of variables distinguishing business success

from failure ..." (p.10). The two most commonly stated variables, however, that seem to

make the difference are capital and management experience. Steiner and Solem (1988)

reported key success factors in small manufacturing businesses would include an

owner/manager with experience in the business or prior experience; adequate financial

resources; a competitive advantage based upon customer and product specialization;

and strategic planning. Dyke, Fischer, and Reuben (1992) found that management

experience may be a significant factor in achieving success or successful performance

in the small business environment. It stated that "would-be business owners should be

concerned to gain related industry, management, and start-up experience... regardless

of the type of industry in which they plan to operate" (p.86). It was also noted, however,

that while experience was a significant factor, it could vary by industry in importance.

This would support Cochran (1981), who suggested that research for specific industries

in specific regions might prove more useful than national studies. This study was
referring to research regarding failures of small businesses, however, this may apply to

successes also. Hand, Sineath, and Howle (1987) discussed variables thought to be

related to business performance, such as characteristics of the entrepreneur (age,

education, experience, willingness to work, and ability to deal with customers and

employees). Also discussed were the planning abilities of the entrepreneur. Chaganti

and Chaganti (1983) indicated that key success factors were innovation, creativity, and

managerial competence, which are characteristics found in owners/entrepreneurs.

Keats and Bracker (1988) found that success factors are a part of an organization's

general environment, task environment, or characteristics of the business owner.

Chawla, Pullig, and Alexander (1997) found that "owner experience and industry trend

are not critical to the success of a manufacturing/construction firm in the early stages of

the life cycle. Comparing retail firms to manufacturing/construction firms in the same

stage of the life cycle, differences were found in the importance of the owner's

experience, market knowledge, industry trend, location issues, and

purchasing/inventory control" (p.47). Location issues were more critical to success for

retail firms both during early and late stages of the life cycle. Purchasing/inventory

control also was critical for retail firms in both the early and later stages. According to

Zetlin (1994), small business owners feel that having a good product is most important,

however, other means of achieving success include a commitment to quality and to the

customer, innovation in marketing, being flexible when change is needed, maintaining

good supplier/customer relationships, and hiring good people that can be empowered.

Bird (1989) stated that firms where owners showed innovation, risk-taking, and had

previous training were most successful. Another study dealing with characteristics of the
owner was by Duchesneau and Gartner (1990). They found that the characteristics of

the owner/manager, the strategy of the firm, and the way the business approached

start-up were most important to success. Prior experience, long working hours, good

communication skills, customer service, planning, flexible management, and risk

reduction were other factors cited. Hills and Narayana (1990) also found a myriad of

factors that were possible contributors to success. These included customer treatment,

good products, management practices, good treatment of employees, and a good

reputation for the company. O'Neill and Duker (1986) indicated that small businesses

that were successful had higher quality products, lower levels of debt, and lower capital

intensity, as well as, relied on the good advice of their accountants. Cooper,

Dunkleberg, and Woo (1989) looked at demographic factors, such as age, gender, and

race, and found that older, nonminority, male entrepreneurs with four or more years of

college were usually associated with successful firms. A study by Bates and Nucci

(1989) confirmed that the age and size of the firm had an impact upon survival. The

older the firm, the more likely it was to remain in business, and the larger the firm, the

more likely it was to be successful. Boyle and Desai (1991) also pointed out that

statistics have shown that the longer a small business has been in operation, the better

the chance that it will stay in business. Success breeds success. Mintzberg (1994)

stated that small business owners must be able to define the required strategies to find

success as they continue to change within their organizations. Castrogiovanni (1996)

explored the impact that planning has on the survival or success of firms. Pre-planning

was specifically investigated using three environmental conditions, which were

uncertainty, munificence, and industry maturity. He also investigated two founding

conditions, knowledge and capital. Findings included a negative relationship between

uncertainty and the survival of new businesses. Munificence (abundance of demand)

was positively related to survival, while industry maturity had mixed effects on the

degree of planning and survival. Pre-existing founder knowledge was found to be

positively related to survival, while capital reduced incentives to plan and, thus, was

likely to negatively impact planning. Bates (1995) conducted a study of survival rates

among franchise and independent small firms, and found that for the period 1984- 1987,

the survival rate was much higher for independent firms, as opposed to franchise

businesses. The study also stated that while existing studies identifying traits leading to

long-term success of small businesses are not incorrect, small firms should not enter

markets that are saturated; which would lead to the assumption that a knowledge of the

market is most important. In 1990, Bates indicated that a firm's likelihood for success

was increased if owners were educated, and if an adequate resource investment was

made at start-up. In a study by Lussier and Corman (1995), it was noted that successful

firms used better professional advisors than did nonsuccessful ones, and it made a

significant difference if their parents owned a business. However, the authors were

unable to find a reliable set of variables to firmly distinguish success from failure.

Variables used in the study included capital, recordkeeping and financial control,

industry experience, planning, professional advisors, education, staffing, product/service

timing, economic timing, age, partners, parents, minority owners, and marketing.

Various other studies have used one or several of these to identify critical success

factors.
RESEARCH FLOW

Theories Legal Bases

Thomas Cochran’s 1987 Philippine Constitution

sociological theory of Article XII – NATIONAL
entrepreneurial supply ECONOMY AND
PATRIMONY, Section 1
John.H.Kunkel‘s behavioral
model

INPUT

Data on:

1. Profile of the Respondents

2. Respondents’ Questionaire

PROCESS

Statistical Treatment
Percentage
Weight Mean

OUTPUT

Recommendation

Figure I
Flow of the Study

CONCEPTUAL FRAMEWORK
 THE PROBLEM

STATEMENT OF THE PROBLEM

It is the intention of the study to analyze the effectives of ABM Strand to the

success of business establishment.

Specifically this research seeks to answer the following posers:

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

1.1 Age;

1.2 Sex/gender;

1.3 Year Level;

1.4 Educational Attainment;

1.5 Type of Business

2.

3.

4.

5.
HYPOTHESIS

This study is geared towards this hypothesis:

If there is adequate information in running a business, then the participants/ business

owners will have a great chance in succeeding.

SIGNIFICANCE OF THE STUDY

This study aims to conceptualize and comprehend the effectiveness of

ABM strand to the success of business establishment. The significance of this study has

a great impact and is believed to reflect far-reaching implications in the lives of people.

The researchers believe that the result of the study will benefit the following:

School. The outcome of this study will serve as a door to the current situation of

the newly implemented K to 12 curriculum which the ABM strand belongs. This would

also serve as an eye opener on the future possibilities of the purpose of the strand .

Community. The society will see the real situation of the 21st Century education

system and what is going on in the business industry. This could help to future

developments of the education system.

Students. The students will be enlightened on the strand – ABM such that it will

give awareness on the current circumstances of the said strand on the business

industry.
 Future Researchers. As for the future researcher, they can benefit on the study

as means as a guide, a tool and reference when conducting researches which has

relevance to the study.

SCOPE AND LIMITATION

Given the limitation of the available statistics in the understanding of the various

dimensions on the issues of participants involved in business, which is widely

acknowledge the present study primarily relied on the field data. The study was

conducted within Tagbilaran City.

DEFINITION OF TERMS

To avoid problems in semantics, the following terminologies are defined as used in this

study.

Entrepreneurship - act that involves many people in terms of business

Business – the activity of making, buying, or selling goods or providing services in

exchange for money.

ABM Strand – track in the K to 12 Curriculum which focuseson the field of

Accountancy, Business and Management

K to 12 Curriculum- model on the education system of the Philippines which there is

an added 2 years of education in High School where students focuses on

four tracks with each corresponding strand.

REFERENCES

Beckman, J., and N. Marks. (1996). Entrepreneurial success and previous business

experience. Southwestern Small Business Institute Association Proceedings, March,

1996, 82-84.

Bird, B. (1989). Entrepreneurial Behavior. Chicago, IL: Foresman. Boyle, R., and H.

Desai. (1991). Turnaround strategies for small firms. Journal of Small Business

Management, 29(3), 33-42.

Castrogiovanni, G. (1996). Pre-startup planning and the survival of new small

businesses: Theoretical linkages. Journal of Management, 22(6), 801-823.

Chawla, S., R. Pullig, and F. Alexander. (1997). Critical success factors from an

organizational life cycle perspective: Perceptions of small business owners from

different business environments. Journal of Business and Entrepreneurship), 9(1), 47-

58.

Cochran, A. (1981). Small business mortality rates: A review of the literature. Journal of

Small Business Management, 19(4), 50- 59.