SMALL AND MEDIUM THESIS Edit FINAL 123

University of San Agustin
Gen. Luna Street, Iloilo City, Philippines, 5000

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CHAPTER I
Introduction
Background of the Study
As mentioned in the State of the Nation Address of the president of the Philippines,
that small and medium shall be developed and sustained in the locality. The role of small
and medium enterprise in the national economy cannot be underestimated. These
enterprises are being given increasing policy attention in recent years, particularly in third
world countries,partly because of growing disappointment with results of development
strategies focusing on large scale capital intensive and high import dependent industrial
plants. The impacts of small and medium enterprise is felt in many ways like greater
utilization of local raw materials, employment generation, encouragement of rural
development, development of entrepreneurship, provision of avenue for self-employment
and the provision of opportunity for training managers and semi-skilled workers(Levy
and Powell, 2010).
Overall economic development, a critically important role is played by small and
medium enterprise. Small and medium enterprise advocates firstly, it’s endurance in
competition has external benefits on economic efficiency, and productive growth.
Secondly, proponent of small and medium enterprise support frequent claim that SMEs
are generally more productive than large firms, but financial market and other
institutional improvements (World Scholars, 2012).
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Small and medium enterprises examine an expanded database of firms in the formal
manufacturing sector with fewer than 10, 20, 100 or 250 employees. Various indicators
are used to measure growth and there doesn’t seem to be any general measurement.
Therefore, sales and employment were the two most important indicators measuring the
firm’s size and growth. Sales figures are on the other hand affected by inflation and
exchange rates and it is difficult to compare sales figures between industries (Davidsson,
Delmar & Gartner, 2006).
The study begins with the hypothesis that countries with larger Micro-enterprise
(ME) or small and medium enterprise sectors have more rapid economic growth in per
capital income (Leegwater& Shaw, 2010). SMEs, especially start-ups, have lower
probabilities of survival than larger firms, leading to high rates of market entry and exit
across nearly all economic sectors. SME’s can be established in any locality for any kind
of business activity in an urban or rural area (Khalique, et al., 2011).
The life of the students as consumers and that of businessmen go hand in hand.
Since we are Business Management major Financial Management, we intended to be
involved in business world someday. We choose this topic Factors influencing the growth
of small and medium enterprises in Iloilo City that so that we will know what contributes
to the growth and development of small and medium enterprises.
The study attempts to know and understand the nature and activities of growth-
oriented owned businesses in Iloilo City by highlighting the problems faces by
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entrepreneurs during the growth process. If these small and medium enterprises could
grow, they would greatly affect the economy of Iloilo City.
The purpose of this research is to study the growth factors of small and medium
enterprises, their growth potential, and what are the obstacles for them to develop their
businesses in Iloilo City. The researchers also wanted to know if some factors such as
competition, employment, flexibility, globalization, initial capital, innovation, and years
of operation can influence greatly to the growth of small and medium enterprises.
Statement of the Problem
This study aims to determine the factors influencing the growth of small and medium
enterprises in Iloilo City for the year 2018.
Specifically, this study seeks to answer the following question;
1. What is the profile of the respondents?
2. What is the most influential factor affecting the growth of small and medium
enterprises in terms of flexibility, competition, globalization, innovation and employment
when respondents are taken as a whole and if they are classified according to age, initial
capital, sex, and years of operation?
3. Are there significant differences in the most influential factor affecting the growth of
small and medium enterprises in terms of competition, employment, flexibility,
globalization, and innovation when the respondents are taken as a whole?
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Hypotheses of the study
The null hypothesis was being tested;
There are no significant differences in the most influential factor affecting the
growth of small and medium enterprises in terms of competition, employment, flexibility,
globalization, and innovation when the respondents are classified according to age, initial
capital, sex and years of operation.
Conceptual Framework
This study was anchored to the concept of Levy and Powell (2005) which states
that the factors influencing the growth of Small and Medium Enterprises are the
competition, employment, flexibility, globalization and innovation. According to Levy
and Powell, the most important factors that influence the growth of small and medium
enterprises are the employment, flexibility and globalization. Employment is the most
evident public benefit of small business growth and it is the contribution made by Small
and Medium Enterprise. Small and Medium Enterprise’s play a big role in the creation of
jobs and country’s employment rate (Levy and Powell, 2005).
A key characteristic of an SME is flexibility, the ability to adapt to changing
environment. Companies are facing external pressures like a transforming market and a
high speed technological change. The Small and Medium Enterprise owner has
considerable personal influence over a firm’s strategies, tactics and operations to engage
in decision process across the firm. As a result, although a flat, informal organizational
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structure is likely to exist, decisions making tends to be quite centralized around the
owner (Levy and Powell, 2005).
The impacts of globalization as a factor to the growth of SMEs have pressured
SMEs to greater demands. Perhaps the most significant source of change impacting many
organizations today is the increasing globalization of organizations and management.
This occurs because firms to control costs, especially to reduce labour costs. Of course
another reason why firms are becoming more global is the response to competition
(Griffin & Moorhead, 2009). SMEs that are internationally active are generally growing
faster than their domestic equivalents. This gives pressures to SMEs to develop
environmental strategies to remain competitive. Many SMEs lack the resources to meet
the global challenge to internationalize. Other factors that can influence the growth of
small and medium enterprises are competition, and innovation. Competition is a threat to
survival; it is the competition that drives firms to improve productivity and therefore
drives growth (Hamann, 2013).
Innovation also plays a crucial role in now day business and it is regarded as a key
characteristic of SMEs, mainly due to the attitude of the manager. Innovative companies
are able to respond within the bounds of the knowledge about existing products or
services to changes required by the customer within their niche market (Levy & Powell,
2005).
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Most reviews and studies of work performance have not established a relationship
between decreased job performances with increasing age and conclude that job
performance is generally the same across all age groups. It was concluded that when
abilities match job requirements and when experience is taken into account, there is little
difference between the performance of older and younger workers (Benjamin and
Wilson, 2005).
Initial capital is essential when you start your own business. Unless you can count
on the bank of your relatives you will need financial backing such as a bank loan or
venture capital supplied by investors. A business plan is critical for securing your own
capital (Guffey, 2011).
Sex-based differences in each of these areas have a profound effect on economic
opportunities for men and women, the productivity of men and women’s labor, the
performance and potential of their businesses, and the incentives facing men and women
as economic agents (Klasen, 2012).
A year of operation is another factor for growth in most businesses today, the most
valuable asset they manage is their people and employee engagement and satisfactions
are strategic imperatives that every leadership team should understand and explore
proactively. Make money and add value to the community it exists to serve (Shawn Parr,
2013).
Paradigm of the Study
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Independent Variable Dependent Variable

Age Flexibility
Initial Capital Competition
Sex Globalization
Years of Operation Innovation
Employment
Figure.1 Factors influencing the growth of Small and Medium enterprises

Employment
Scope and Limitations of the study
This study focused on the factors influencing the growth of small and medium
enterprises in Iloilo city specifically in Lapaz, Mabini Street, Delgado Street, Valeria
Street and Delgado Street, for 1st Semester, 2018-2019.
The study determines how dependent variables like flexibility, competition,
globalization, innovation, and employment influence the Small and Medium Enterprise’s
growth. The study also used independent variables limited to age, initial capital, sex, and
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years of operation. The respondents of the study are the two hundred (200) managers/
owners of small and medium enterprises in Iloilo City.
The researcher-made instrument IS used to determine the factors that influenced
the growth of small and medium enterprise. The respondents are two hundred (200)
owners of small and medium enterprises.
The statistical tools for descriptive data analysis are frequency counts, percentages,
means, and standard deviations while Mann-Whitney U Test, and Kruskal Wallis Test for
the inferential data analysis. All inferential statistics are set at .05 level of significance.
Significance of the study
The study is beneficial to the following:
Owners of Small and Medium Enterprises. These findings could guide the
owner/owners on how his/their management qualities could influence the way business is
being run smoothly and may gain insights about Small and Medium Enterprise to further
evaluate and develop the growth of their enterprise.
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Future Entrepreneurs. Through this study, the future entrepreneurs will be able to
evaluate and get information about Small and Medium Enterprises in Iloilo City which
they can use in their teaching.
Researchers. The researchers would be able to gain knowledge about the factors
influencing the growth of Small and Medium Enterprises in Iloilo City which serve as
guide in understanding their field of specialization.
Definition of Terms
To give clarity on the terms used in this study, the following terms were defined
conceptually and operationally:
Age is the length of time that a person or thing has existed (American Heritage 5th
edition, 2011).
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In this study, age was classified how old the owner/ managers started their
business.
Competition when two or more organizations act independently to supply their
products to the same group of consumer (Delmar, 2013).
In this study, competition drives firms to improve productivity and therefore drives
growth
Employment is an agreement between an employer and an employee that
employee will provide certain services (The Balance Career, 2016).
In this study, employment refers to the people who are set to work in small and
medium enterprises in Iloilo City.
Flexibility is an ability to adapt an operating system to respond to the changes in
environment (Matthew Torren, 2014).
In this study, flexibility referred to the ability of a company to make whatever
internal changes are necessary to respond effectively to the changing outward
environment, as quickly as possible.
Globalization the processes by which businesses or other organizations develop
international influence or start operating on an international scale. (Business Dictionary)
In this study, globalization refers to the free movement of goods and services of
small and medium enterprises across the world.
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Growth is the process of improving some measure of an enterprise's success
(Business Dictionary, 2015).
In this study, growth refers to the increase in the market value of the goods and
services produced by an enterprise over time.
Innovation is the act that endows resources with a new capacity to create wealth
(Peter Drucker, 2015).
In this study, innovation refers to the results when ideas are applied by the
company in order to further satisfy the needs and expectations of the customers.
Small and Medium Enterprise - Non-subsidiary, independent firms which
employ less than a given number of employees (OECD, 2013).
In this study, small and medium enterprise refers to the business establishments in
Iloilo City.
Years of Operation - is the state of being active (Farlex Dictionary, 2016).
In this study, years of operation refer to the age of the enterprise or years the
enterprise is operating or existing.
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CHAPTER II
Review of Related Literature
This chapter represents the review of literature and studies that were related to the
past investigation of the factors influencing the growth of Small and Medium Enterprise.
Small businesses are the engine of growth and development of any economy,
generating jobs and income, stimulating competition, sources of innovation, creating
possibilities for business ventures and etc. (de Kok et al., 2011). The world economic
crisis, which caused series of unexpected events, further demonstrated the vulnerability
of large companies and the consequences, and even more revealed the importance of
small business for economic recovery in the post-crisis period. The huge presence of
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small businesses in any economy provides a basis for reviewing various aspects related to
their operations. In terms of increasing the importance of small business for the recovery
and growth of world economy, growth of small businesses imposes itself as a relevant and
important research area. Additionally, the high failure rate, i.e. mortality of small
businesses, increases the interest towards overcoming issues related to growth of small
business.
Growth is considered as a phenomenon which is determined by various factors, in
and out of control by the owner or the management of small businesses. One of the main
problems in analyzing growth of small business is that most of the research considers the
extent of growth, while usually not perceiving the existence of substantial qualitative
differences in how businesses achieve growth (McKelvie and Wiklund, 2010). An
additional problem concerning the issue of growth is typically the attention on general
factors that influence the growth, associated with five factors flexibility, competition,
globalization, innovation and employment (Wiklund et al, 2009). These factors are often
beyond the control of the owners of small business, especially those related to growth and
development.
The biggest concern of the business that enters this stage is the consolidation and
control of financial gains, caused by rapid growth and secondly, maintaining the
advantages of the small business, which means flexibility in response and the
entrepreneurial spirit. In this part of development, the business typically focuses more
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attention to efficient management of products or services, and not so much to expansion
of activities. The business must extend its management forces quickly enough to
eliminate inefficiencies, which can produce growth and bring the business to another
professional level using the tools as: budget, strategic planning, and management by
objectives and standard cost systems.
Studies have shown that size affects growth although no agreement has been
reached on whether small enterprises tend to grow more than big ones (Bentzen et al.,
2012; Brito et al., 2007; Daunfeldt&Elert, 2013; Teruel-Carrizosa, 2010). For instance,
Bentzen et al. (2012) analyzed a group of Danish industries during 15 years and
concluded that big enterprises had a relatively bigger growth than smaller ones. Similarly,
Brito et al. (2007) investigated a database with 13,221 firms from 46 countries, based on
9-year data, and identified a positive relationship between size and growth rate. However,
the relationship between size and growth is a rather complex affair: in industries with a
great number of new firms, the small firms are at a disadvantage and small firms are
obliged to grow fast or quit. On the other hand, smallfirms in mature industries have a
great probability in obtaining lower growth rates due to reduced levels of opportunities.
Innovation and market structure determine growth. There is a great probability that
small innovating firms grow faster than big firmst hat shun innovations
(Daunfeldt&Elert, 2013). Market structure has an influence on the firm´s growth
capacity, especially service ones which are more heterogeneous and tend to grow less
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than industrial firms. Although industries require heavy investments; service firms quit
the market quickly (Teruel-Carrizosa, 2010). If, on the one hand, small enterprises
require specialists and counseling firms less, with increasing chances of growth
(Davidsson et al., 2010), the use of their abilities to enhance growth derives from the
learning process acquired by experience and over time. The firm´s growth will depend on
the use of their learning capacity to develop efficiency.
The innovation trend was the size of the enterprising orientation with the greatest
influence and evidenced the innovation effect on growth. Similarly, Omri&Ayadi-Frikha
(2014) identified the positive effect of innovation on growth in small Tunisian
enterprises.
The importance of small and Medium Sector in the Philippines
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.
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The importance of SMEs to social and economic development of the local
economy is almost undisputed. Throughout the country, an SME is a priority in most
countries as it is widely recognized. There is no doubt that SMEs constitute the seed-bed
for the imminent generation of entrepreneurs. (Aryeetey, 2001).Small and medium rural
and urban enterprises have been one of the major concerns for many policy makers in an
attempt to accelerate the rate of growth in the localeconomy (Aryeetey, 2001).
SMEs provide employment and incomes for a large portion of the urban labor force and
are a significant source of total output. It is estimated that SMEs employ about 22% of
the adult population in most developing countries (Daniels, 2014).
Factors influencing small and medium enterprises
Flexibility
Flexibility is a way to help people define how and when work is done, flexibility helps
employers and employees work effectively to enable the organization achieve its
objectives. (Simonetta Manfredi, Director, Centre for Diversity Policy Research, Oxford
Brookes University.)Flexibility is seen to be important in workplace to both employers
and employees because it gives them an opportunity to organize the way they work in a
way that will be comfortable with their personal lives. For employers flexible working
can help retain staff who have the required and skill required by the employer, it also
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widens the talent pool in the job market enabling them to recruits potential workers with
more skill and still retain the staffs that are loyal and committed which can lead to an
increase in productivity and profitability (Confederation of British Industry 2009).To
raise morale and job satisfaction: flexible working increases the morale of employers to
perform at their utmost best because they feel they are treated as adults who have control
of their life and their time and they tend to perform at their utmost best when they are at
work.
Reflections on the flexibility of organizations became an important issue in the
field of management sciences. In general approach, the notion of flexibility is related to
the ability of an organization to quickly and easily implement changes (to adapt) in
response to internal or (more often) external impulses. However, the notion of flexibility
is not precisely defined and different authors propose different approaches, additionally
distinguishing specific kinds of flexibility. A broad summary of these definitions is
presented by R. Krupski and G. Osbert-Pociecha (2008, pp. 15-23). Here, flexibility is
defined as a characteristic (quality) as well as an ability of an organization (see more:
Czakon 2012, pp. 146-151) enabling it to remain resilient through responding freely to
new and changing circumstances (impulses), altering and engaging in beneficial
activities.
Flexibility is described through a scope of possible states (options, goals, actions)
as well as the time and costs necessary to achieve them. Moreover, it requires
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concentration and liquidity of the organization’s resources. R. Krupski (2006, p. 9)
emphasizes also the two dimensional character of flexibility, which is composed of: the
promptness of reaction (or creation) and the level of adaptation in each of the
organization’s elements alone and in all of them together.
Competition
The existing literature on SME competitiveness primary focuses on identifying
the factors that are relevant to SME competitiveness and the determinants of its success.
It emphasizes on the role of innovation as a key element of competitiveness and it mainly
focuses at a country level.
Karaev et al examine the use of a cluster approach among SMEs as a tool for
meeting their challenges related to globalization and trade liberalization, as well as
investigating its contributing factor in the process of increasing their competitiveness.
Munir et al look at the sustainability of the competitive advantage of SMEs by
studying the capabilities that they need to develop in order to achieve it.
Globalization
Globalization has impacted SMEs in that it has changed the role of SMEs within
domestic economies. Initially, SMEs were generally viewed as less efficient enterprises
than their larger counterparts and conventional wisdom would have predicted that
increased globalization would present a more hostile environment to small businesses.
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The additional costs of globalization that is fixed costs of learning about foreign
environments, communicating at long distances, and negotiating with foreign
governments would be a reason for expecting that engaging in foreign investment will be
mainly an activity of large firms (Audretsch, 2009).
SMEs seem less equipped to embrace opportunities presented while confronting
challenges of globalization. Globalization offers SMEs opportunities to participate in 6
the regional and international markets while internationalization presents opportunity for
growth and development beyond the local market. However globalized production by
multinationals presents new threats in form of increased competition
(Kaushalesh&Peedoly, 2006). Limited access to global markets denies SMEs significant
opportunities confining them to saturated local markets whereas internationalization is
necessary for their survival and expansion. Barriers that limit SME internationalization
include limited information on foreign markets and technology, lack of managerial skills,
limited knowledge, and limited resources to finance exports, inefficient transactions and
limited product and service quality to meet customer requirements (OECD, 2010).
Innovation
Small and medium enterprises have been considered one of the driving forces in
the economy due to their numeral contributions in terms of technological innovations,
employment generation, export promotion to list a few (Subrahmanya et al, 2010).
Innovation is the key to the growth of SMEs as it provides firms with a competitive edge
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over other firms in the industry. Technological innovation plays in strategically to
provide firms with a competitive edge as well as help such firms to gain entry into new
markets (Becheikh et al 2006). Burrone and Jaiya 2005 put it that the ability of firms to
innovate varies significantly depending on their sector, size, focus, resources and
business environment in which they operate.
Many studies have been conducted and it seems evident that there exists a strong
relationship between technological innovation and the growth of SMEs done in firms
based in different industries. Coad and Rao (2008) probed the relationship between
innovation and the growth of sales for firms in high tech sectors. Using a quartile
regression approach, they observed that innovation is of a crucial importance for selected
fast growth firms. If any undertaken innovation is successful, the share of innovated new
products is likely to increase in the total sales of the firm and when this happens, firms
will be able to achieve growth in their sales turnover, investment and employment which
would all result to achieving growth of firm size. Technological innovation is a key factor
in a firm’s competitiveness. Technological innovation is unavoidable for firms which
want to develop and maintain a competitive advantage and gain entry in to new markets
(Becheikh et al. 2006). Among firms of different sizes, SMEs are generally more flexible,
adapt themselves better, and are better placed to develop and implement new ideas. The
flexibility of SMEs, their simple organizational structure, their low risk and receptivity
are the essential features facilitating them to be innovative. Therefore, SMEs across
industries have the unrealized innovation potential (Chaminade & Vang 2006). Through
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empirical research one can generate new and creative ideas about products and processes.
Some researchers observe that increasing profit of organization is because of change in
technology.
Employment
According to Ayyagari et al. (2007) asserted that the promotion of the SME sector
is a core element to foster employment, economic growth, and poverty alleviation. Beck,
Demirguc-Kunt, & Levine (2005) found a large SME contribution to employment, and
World Bank (2004) stated that this contribution has been increasing particularly in
developing countries. Furthermore, Stein et al. (2010) highlighted that SMEs in
developing countries represent approximately 45 percent of employment and
approximately 33 percent of GDP. Based on a sample composed of 104 developing
countries, Ayyagari et al. (2011) stated that small firms (less than 20 employees)
contribute around 20.21 percent to total permanent, full-time employment. When small
firms and medium firms (20 to 99 employees) are considered together, the mean
employment share of SMEs is 47.94 percent which is comparable to the contribution
made by large firms.
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CHAPTER 3
RESEARCH METHODOLOGY
This chapter deals with the research design used in the research study. It also
contains the respondents of the study, research instrument, validity and reliability, data
processing and the statistical tools used in the study.
Research Design
This research study used the descriptive method of research. According to Yin
(2003), descriptive research describes what is. It involves the description, recording,
analysis, and interpretation of the present nature, composition or process of phenomena.
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Furthermore, the focus is on prevailing conditions, or how a person, group or thing
behaves or functions in the present. Moreover, it often involves some type of comparison
or contrast (Amante, 2008).
Descriptive studies are aimed at finding out "what is," so observational and
survey methods are frequently used to collect descriptive data (Borg & Gall, 1989).
Descriptive studies report summary data such as measures of central tendency including
the mean, percentage, and correlation between variables. Survey research commonly
includes that type of measurement, but often goes beyond the descriptive statistics in
order to draw inferences.
Respondents of the study
The respondents of the study were the 200 owners and managers of selected small
and medium enterprises in Iloilo City. For choosing the sample, using the Convenience
sampling wherein our samples vary according to the availability of the owners of small
and medium enterprise, keeping in mind the objective of researching the SME’s.
Data Gathering Instruments
The instrument was a researcher-made questionnaire for the SME’s owner-
entrepreneurs. The questionnaire was composed of two parts. Part I which include the
personal details of the owner and his/her business specific age, sex, initial capital and
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years of operation. Part II, which includes the questionnaire proper in terms of
competition, employment, flexibility, globalization, and innovation.
. A letter of permission stating the purpose of the study was sent to the owner or
manager of different enterprises.
The questionnaire is properly focused on the most influential factor of the growth of
small and medium enterprises in Iloilo City.
A copy of the researcher-made questionnaire was submitted for content validation
to a panel of evaluators who are considered in the field of research and education. It was
done in order to determine whether the questions in the researcher-made questionnaire
are valid or not.
Data Gathering Procedure
The study was conducted in Iloilo City. The permission to conduct the study
was requested from the research adviser. A letter of permission stating the purpose
of the study was sent to the owner or manager of the enterprise. The form was asking
permission from the respondents to gather relevant data necessary for the study. The
consent guarantees the confidentiality of the information gathered from the respondents.
The respondents were asked to read and answer the questions themselves. The
researchers showed sincere gratitude for the active participation in our research study.
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The respondents took their time to answer the questionnaire. After the
respondents have answered the questionnaires, this was gathered and checked by the
researcher for completeness. The data were gathered, encoded and tabulated using the
appropriate statistical tool. The mean scores were interpreted as follows:
Mean Interpretation
4.21- 5.00 Highly Influential
3.41- 4.20 Influential
2.61- 3.40 Moderately Influential
1.81- 2.60 Slightly Influential
1.00- 1.80 Not Influential
Statistical data analysis
The statistical tools used in the study were the frequency counts, percentages, mean,
Mann-Whitney U-Test, and Kruskal Wallis Test.
Frequency counts were used to determine the average and number of occurrences of
the variables.
The mean was used to describe the level of the factors influencing the growth of
small and medium enterprises when taken as a whole and when grouped according to
age, initial capital, sex, and years of operation.
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Rank was used to determine the most influential factor influencing the growth of
small and medium enterprises when taken as a whole and when grouped according to
age, initial capital, sex and years of operation.
Mann-Whitney U test is a non parametric test and to be used to determine the
significant differences between two variables.
Kruskal Wallis is non-parametric test and to be used to determine the significant
differences between three or more variables.
All statistical computations were computer-processed using the Statistical Package
for Social Sciences (SPSS) software set at 0.05 level of significance.
CHAPTER 4
RESEARCH FINDINGS AND DISCUSSION
This chapter presents the data gathered by the respondents. These data were
tabulated and analyzed so that researchers can come up with the conclusions and
recommendation that will be presented in this study. It aims to answer the following
statement. First is to identify the profile of the respondents, second, to identify the factor
influencing the growth of small and medium enterprises in Iloilo City when respondents
are taken as a whole and classified according to age, sex, initial capital and years of
operation. Lastly, to know if there is significant difference in the factors influencing the
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growth of small and medium enterprises terms when respondents are taken as a whole
and classified according to age, sex, initial capital and years of operation. These were
subjected to analysis and interpretation. Descriptive analysis was presented first, followed
by inferential analysis.
Profile of the respondents
Table 1 shows the result of the study that 200 respondents were classified
according to sex, age, initial capital and years of operation.
Majority 112 (56%) of the respondents with an age bracket of 41-50 years old, 62 (31%)
with an age bracket of 31-40 years old, 15 (7%) with an age bracket of over 50years old,
and 11(6%) with an age bracket of below 31 years old. This means that older owners are
more experience than younger owners.
When respondents are grouped according to sex, there are 117 (58%) male
owners and 83 (42%) female owners. As can be noted, there are more males respondents
compared to female respondents in this study.
When grouped according to initial capital, there are 145 (72%) with below 3
million pesos, 45 (23%) with 3-15 million pesos, 10 (5%) with more than 15 million
pesos. In terms of years of operation, there are 67 (23%) enterprises below 5 years, 68
(34%) with 5-10 years, 45 (23%) with 11-15 years, and 20 (10%) more than 15 years of
operations. The data shows that older firms grow faster than the younger ones because of
the experience over the years.
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Table 1. Profile of the Respondents
Category f %
Entire Group 200 100
Age
Below 31 years old 11 6
31 – 40 years old 62 31
41 – 50 years old 112 56
Over 50 years old 15 7
Sex
Male 117 58
Female 83 42
Initial capital
Below 3 million 145 72

3 – 15 million 45 23
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More than 15 million 10 5

Years of operation
Below 5 years 67 33
5 – 10 years 68 34
11 – 15 years 45 23
Above 15 years 20 10
Table 2 show the most influential factor affecting the growth of small and medium
enterprises were “highly influential” in terms of flexibility (M = 4.72, rank = 1st),
competition (M = 4.63, rank = 2nd), globalization (M = 4.58, rank = 3rd), innovation (M =
4.57, rank = 4th), and employment (M = 4.45, rank = 5th) with the mean scores which fell
within the scale 4.21 – 5.00. The data shows that flexibility was rank 1st as the highly
influential factors affecting the growth of small and medium enterprises in Iloilo City.
Table 2 Most influential factor affecting the growth of small and medium enterprises
when takes as a whole
Factors Means Description

Flexibility 4.72 Highly influential
Competition 4.63 Highly influential
Globalization 4.58 Highly influential
Innovation 4.57 Highly influential
Employment 4.45 Highly influential
Table 2.1 shows that the factors are “highly influential” in the growth of small
and medium enterprises when they are categorized according to age. It shows that
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competition is highly influential for respondents with an age below 31 years old
(M=4.78), highly influential (M=4.56), for respondents of 31-40 years old, highly
influential (M=4.66,) for the age bracket of 41-50 years old, and highly influential
(M=4.53) for respondents over 50 years old with a mean score of 4.63. Competition is
highly influential in the growth of small and medium enterprises when they are
categorized according to age.
It shows that employment is highly influential for respondents with an age below
31 years old (M=4.27), highly influential (M=4.40), for respondents of 31-40 years old,
highly influential (M=4.46,) for the age bracket of 41-50 years old, and highly influential
(M=4.73) for respondents over 50 years old with a mean score of .4.46 employment is
It shows that flexibility is highly influential for respondents with an age below 31
years old (M=4.47), highly influential (M=4.72), for respondents of 31-40 years old,
(M=5.0) for respondents over 50 years old with a mean score of 4.72 flexibility is highly
influential in the growth of small and medium when they are categorized according to
age.
It shows that globalization is highly influential for respondents with an age below
31 years old (M=4.69), highly influential (M=4.54), for respondents of 31-40 years old,
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(M=4.80) for respondents over 50 years old with a mean score of 4.6 for Globalization is
It shows that innovation is highly influential for respondents with an age below 31
years old (M=4.38), highly influential (M=4.53), for respondents of 31-40 years old,
(M=4.67) for respondents over 50 years old with a mean score of 4.54 innovation is
highly influential in the growth of small and medium when they are categorized
according to age.
One of the ways has been through entrepreneurship, which means that businesses
run by people of all ages have cropped up. , the results of the study probably means that
factors are highly influential in a business, most older entrepreneurs and managers may
have more personal experience compared to the younger ones, but due to availability of
knowledge in our modern society, young entrepreneurs can cut the learning curve in a
dramatic rate by learning from the experience and mistakes of other people from the past,
this is the reason why even respondents have unclear diversified personal reasons, they
still agree on the same idea that they must be aware of their competitions to be
competent in quality and service, optimize their employment to provide leveraged
manpower for operations ,be updated with the latest trends to be flexible, take advantage
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of modern globalization to eliminate geographic burdens for overall growth,must
consider spending specified amount of their primary resources to avoid compromising
state of the overall initial capital, must innovate to satisfy the demand of their primary
need which is customers,and read stat numbers, learn priceless ideas, identify perfect
pitches for a call to action strike, these ideas can be gained from years of operation from
other ventures to their own, these factors must not be ignored no matter how old is the
person who runs the enterprise.
Table 2.1 Most influential factor of Small and Medium Enterprises when classified
according to age.
Factors Below 21 yrs. Old 31-40 yrs. Old 41-50 yrs. Old Over 50 yrs. Old
Mean Mean Mean Mean
Flexibility 4.78 4.56 4.66 4.53
Competition 4.27 4.40 4.46 4.73
Globalization 4.47 4.72 4.71 5.0
Innovation 4.69 4.54 4.56 4.80
Employment 4.38 4.53 4.58 4.67
Table 2.2 shows the factors influencing the growth of small and medium
enterprises were “highly influential” in terms of flexibility (M = 4.72, rank=1st), followed
by competition (M=4.58, rank= 2nd), globalization (M=4.52, rank =3rd), innovation
(M=4.51, rank= 4th) and lastly employment (M= 4.47, rank= 5th).
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According to World Health Organization, 50.4% of the total world population
were male and the remaining 49.6 % are females, and according to Forbes.com, only 4
women belongs to the top 40 Richest people in the world. This is interesting because the
top richest people in the world are entrepreneurs, this supports the theory that males are
generalists and women are specialists, the positive nature of males when it comes to
professional career management and personal development is they provide dull
and straightforward solutions to every problem, they focus on things that really matter
and overlook often overlook miscellaneous subjects. Men tend to make them quicker and
women need more time. Male entrepreneurs focus on making sure costs are under control
and are more profit driven. Men and women tend to start different kinds of enterprises.
When it comes to financial risk, men are more willing to undertake the risk than women.
Men and women also differ in how they manage their businesses. Men tend to be more
tasks oriented than women.
Women, on the other hand establish good relationships with employees,
relationships are more important to women. They are more focused and firm when it
comes to making decisions, doesn’t easily give up and they are more positive, Women
analyze each circumstance, they think critically before they make decisions. Women
claim to manage using more “feminine” strategies than men. An example of this would
be that women tend to value the relationships with their employees more than the task at
hand. Men and woman also may think differently. Male entrepreneurs are more logical
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thinkers. Female entrepreneurs are more intuitive thinkers. Women exhibit more social
leadership styles that focus on communication and expressive behavior.
This idea states that entrepreneurs are visionaries who form an image of their
business that helps guide them to success. To grow a venture one must effectively
communicate their vision to their employees and stakeholders. Owners and managers
must have clear intentions of where they want to go. The inspiration that an entrepreneur
has for a business must be followed up with consistent attention and intention.
Entrepreneurs are goal oriented and focus to achieve their goals, men and woman may
have distinct contrasting characteristics, yet factors presented in this study are highly
influential because they serve as foundations for every business venture.
Table 2.2 Most influential factors of Small and Medium Enterprises when classified
according to sex.
Factors Male Female

Mean Mean
Flexibility 4.70 4.75
Competition 4.58 4.70
Globalization 4.52 4.65
Innovation 4.51 4.62
Employment 4.47 4.43
enterprises were “highly influential” with a bracket of below 3 million in terms of
flexibility (M=4.67, rank=1st), followed by competition (M=4.63, rank= 2nd), innovation
(M=4.54, rank=3rd), globalization (M=4.49, rank=4th), lastly employment (M=4.44,
rank=5th).
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With an initial capital bracket of 3-15 million, flexibility (M=-4.89, rank=1st)
“highly influential”, globalization (M=4.78, rank 2nd), competition (M=4.60, rank= 3rd),
innovation (4.53, rank=4th) and employment (M=4.44, rank=5th).
For the initial capital bracket of more than 15 million, globalization and
innovation (M=4.90, rank=1st) were “highly influential” followed by flexibility,
competition, and employment (M=4.70, rank= 2nd).
The results probably mean that initial capital is crucial to the success of any new
business. There are some differences between entrepreneurs regarding the financing in
the businesses. Most ventures usually start their business with less capital and their
businesses tend to be smaller, lack of start-up capital can affect the survival rates of
businesses and their ability to grow.
according to initial capital
Factors Below 3 Million 3-15 Million More than 15 Million

Mean Mean Mean
Flexibility 4.67 4.89 4.70
Competition 4.63 4.60 4.70
Globalization 4.49 4.78 4.90
Innovation 4.54 4.53 4.90
Employment 4.44 4.44 4.70
enterprises when classified according to years of operation under the bracket of below 5
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years old were “highly influential” in terms of flexibility and competition (M=4.69,
rank=1st). For the bracket of 5-10 years old, flexibility (M=4.65, rank=1st) were “highly
influential”. Under 11-15 years old, flexibility (M= 1.80, rank=1st) and above 15 years
old flexibility (M=4.85, rank=1st) were “highly influential”.
` The results of the study could mean that time is limited no matter how you slice it;
there are 24 hours in a day. That applies in your business, and to your competitors who
only seem able to do half the amount of work you do. if you want your business to grow,
you have to acknowledge the importance of finding a way to manage this limited
resources called time, as the old saying goes “time change everything” this supports the
statistic that most business fails for the first 5 years, change happens along with them.
Firms operating in today’s economy are experiencing increased pressure due to
several factors, including a rapidly changing business environment, shorter product life
cycles, increasingly demanding and less loyal customers with rapidly evolving
preferences, and fierce competition these factors seek the ability to adapt in different
trends (BuckiandPesqueux 2000, Dryer and Gronhaug 2004).
according to years of operation
Factors Below 5years old 5-10 years old 11-15 years old Above 15 years
old
Mean Mean Mean Mean
Flexibility 4.69 4.65 4.80 4.85
Competition 4.69 4.58 4.58 4.70
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Globalization 4.57 4.53 4.60 4.70

Innovation 4.58 4.61 4.47 4.50
Employment 4.47 4.38 4.53 4.45
Inferential Data Analysis
The Mann Whitney U-test results in Table 3 revealed that the male and female
managers/ owners differ significantly in the factors of the growth of small and medium
enterprises in terms of flexibility (U) = 3862.00, competition (U) = 3805.00,
globalization (U) = 3853.50, all p value are less than .05 while employment (U) =
4257.50, and innovation (U) = 4287.00 does not differ significantly, obtaining p value
greater than .05. The null hypothesis which states that there is no significant difference in
the growth of small and medium enterprises in terms of flexibility, competition, and
globalization was rejected while employment and innovation was accepted when they are
categorized according to sex.
The result simply implied that with regards to sex, male and female owners/
managers have different perception in terms of the growth of small and medium
enterprises.
Table 3 The difference of the Growth small and medium enterprises in Iloilo City
when categorized according to sex.
Variables N Mean Sum of Mann- Sig. Remarks

Rank Ranks Whitney U value
Flexibility
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Male 117 92.01 10765.00 3862.000* .010 Significant

Female 83 112.47 9335.00
Competition
Female 83 113.16 9392.00
Globalization
Female 83 112.57 9343.50
Employment
Male 117 105.61 12356.50 4257.500 .128 Not Significant
Female 83 93.30 7743.50
Innovation
Male 117 95.64 95.64 4287.000 .152 Not Significant
Female 83 107.35 107.35
* Difference is significant at .05 level of significance.
The Kruskal Wallis test results in Table 4 revealed that the managers/ owners
differ significantly in the factors of the growth of small and medium enterprises in terms
of flexibility (X2) = 31.320, competition (X2) = 11.586, globalization (X2) = 10.077, and
employment (X2) = 21.192, all p values are less than .05. The null hypothesis which
states that there is no significant difference in the growth of small and medium
enterprises in terms of flexibility, competition, globalization, and employment when they
categorized according to age, was rejected.
The result simply implied that with regards to age, owners/ managers have
different perception in terms of flexibility, competition, globalization, and employment of
the growth of small and medium enterprises
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On the other hand, the Kruskal Wallis test results in Table 15 further revealed that
the managers/owners did not differ significantly in the factors of the growth of small and
medium enterprises in terms of innovation (X2) = 4287.00, the p value is greater than .05.
The null hypothesis which states that there is no significant difference in the growth of
small and medium enterprises in terms of innovation when they categorized according to
age, was not rejected.
The result simply implied that regardless of age, owners/ managers have similar
perception in terms of innovation of the growth of small and medium enterprises.
Table 4 Difference of the Growth small and medium enterprises in IIoilo City when
categorized according to age
Variables Mean Df X2 value Sig. value Remarks
Rank
Flexibility
Below 31 years old 55.55 3 31.320* .000 Significant
31-40 years old 93.55
41-50 years old 99.52
Over 50 years old 169.50
Competition
31-40 years old 91.70
41-50 years old 107.06
Globalization
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31-40 years old 88.37
41-50 years old 101.33
Employment
31-40 years old 86.44
41-50 years old 103.99
Innovation
Below 31 years old 66.45 3 5.042 .169 Not Significant

31-40 years old 99.23
41-50 years old 102.65
of flexibility (X2) = 11.450, competition (X2) = 10.999, globalization (X2) = 12.920, all p
values are less than .05. The null hypothesis which states that there is no significant
difference in the growth of small and medium enterprises in terms of flexibility,
competition, and globalization when they categorized according to years of operation,
was rejected.
The result simply implied that with regards to years of operation, owners/
managers have different perception in terms of flexibility, competition, and globalization
of the growth of small and medium enterprises.
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the managers/ owners did not differ significantly in the factors of the growth of small and
medium enterprises in terms of employment (X2) = 7.147, and innovation (X2) = 5.152,
the p value is greater than .05. The null hypothesis which states that there is no significant
difference in the growth of small and medium enterprises in terms of employment and
innovation when they categorized according to years of operation, was not rejected.
The result simply implied that regardless of years of operation, owners/ managers
have similar perception in terms employment and innovation of the growth of small and
medium enterprises.
Table 5 Difference of the Growth small and medium enterprises in IIoilo City when
categorized according to years of operation
Variables Mean Rank Df X2 value Sig. value Remarks

Flexibility
5-10 years old 88.01
11-15 years old 116.67
16-20 years old 124.13
Over 20 years
Competition
11-15 years old 80.17
16-20 years old 111.75
Globalization
11-15 years old 118.28
16-20 years old 122.13
Employment
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11-15 years old 116.61
16-20 years old 106.88
Innovation
5-10 years old 109.73
11-15 years old 87.00
16-20 years old 90.00
of flexibility (X2) = 19.165, globalization (X2) = 39.949, employment (X2) = 7.860, and
innovation (X2) = 10.346, all p values are less than .05. The null hypothesis which states
that there is no significant difference in the growth of small and medium enterprises in
terms of flexibility, globalization, employment and innovation when they categorized
according to initial capital, was rejected.
The result simply implied that with regards to initial capital, owners/ managers
have different perception in terms of flexibility, globalization, employment, and
innovation of the growth of small and medium enterprises
the managers/ owners did not differ significantly in the factors of the growth of small and
medium enterprises in terms of competition (X2) = 2.335, the p value is greater than .05.
The null hypothesis which states that there is no significant difference in the growth of
small and medium enterprises in terms of competition when they categorized according
to initial capital, was not rejected.
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The result simply implied that regardless of initial capital, owners/ managers have
similar perception in terms competition of the growth of small and medium enterprises.
Table 6 Difference of the Growth of small and medium enterprises in Iloilo City when
categorized according to initial capital
Factors Mean Rank Df X2 value Sig. value Remarks
Flexibility
Below 3 million 90.55 2 19.615* .000 Significant
3 – 15 million 132.56
16 – 50 million 100.50
Competition
Below 3 million 103.03 2 2.335 .311 NotSignificant
3 – 15 million 89.83
16 – 50 million 111.75
Globalization
3 – 15 million 133.06
16 – 50 million 167.50
Employment
3 – 15 million 106.22
16 – 50 million 145.25
Innovation
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3 – 15 million 97.72
16 – 50 million 157.00
Chapter V
Summary, Findings, Conclusion and Recommendations
The summary, conclusions and recommendations the summary of data, as well
the conclusions contingent on this study is presented. Recommendations as to future
actions with the data enclosed are also discussed.
Summary
This chapter summarizes the main findings, conclusion and recommendations
arising from the results of this study. The present study was undertaken to determine
affecting the growth of small and medium enterprises in terms of flexibility, competition,
globalization, innovation and employment, the respondents were composed of 200
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owners and managers of small and medium enterprises in Iloilo City . This study also
aims to determine how age, initial capital, sex and years of operation affect the
development of the said businesses. The factors were measured by an instrument which
is a questionnaire made by the researchers with questions related to the factors
influencing the growth of small and medium enterprises in Iloilo City.
The instrument used in gathering data for this study is the survey questionnaire,
the questionnaire contains the personal information data of the respondents and questions
related to the factors affecting small and medium enterprises in Iloilo City.The data
gathered were statistically processed and analyzed using statistical package for the social
sciences (SPSS) and were subjected to statistical tests such as frequency, percentages,
ranks, means and standard deviations for the descriptive data analysis while Mann-
Whitney u test, and Kruskal Wallis test for the inferential data analysis.
Findings
The findings of the study were as follows;
The demographic profile of the two hundred (200) owners and managers of small
and medium enterprise in Iloilo City are covered in this study, and study showed that 112
respondents or 56%of the has an age bracket of 41 – 50 yearsold, 62respondents or 31%
has an age bracket of 31 – 40 years old, 15respondents or 7% has an age bracket of over
50 years old, and11 respondents or 6% belongs to the age bracket of under 31 years old.
As to the initial capital, 145respondentsor 72% has a capital below 3 million pesos,
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45respondents or 23%with 3 – 15 million pesos, 10 (5%) with more than 15 million
pesos. When grouped according to sex 117 respondents or 58% are male owners and
83respondents or 42% are female owners. In terms of year of operation, 67 respondents
or 33% operates below 5 years, 68 respondents or 34% has been operating for the past 5 –
10 years and 45 respondents or 23% of respondents has been in operation for 11 – 15
years, and the remaining 10% or 20 respondents has been has been operating for more
than 15 years.
Study shows that the most influential factor of small and medium enterprises is
flexibility (M = 4.72,) followed by competition (M = 4.63), globalization (M = 4.58),
innovation (M = 4.57), and employment (M = 4.45). With the mean scores which
fell within the scale 4.21 – 5.00, shows that flexibility is the most influential factor
while employment is the least influential factor when taken as a whole.
The study showed that there are no significant differences in the most
influential factor affecting the growth of small and medium enterprises in terms of
competition, employment, flexibility, globalization, and innovation when the
respondents are classified according to age, initial capital, sex and years of
operation.
Conclusion
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Based from the aforementioned findings, the following conclusions were
drawn:
The study showed that there are no significant differences in the most
influential factor affecting the growth of small and medium enterprises in terms of
flexibility, competition, globalization, innovation and employment when the
respondents are classified according to age, initial capital, sex and years of
operationn .The study showed some interesting patterns about age, initial capital,
sex and years of Operation. Only a small percentage of businesses are run by
respondents from the youngest and oldest age brackets which are under 31 years
old or 6% and over 50 years old or 7%, only 5% has an initial capital of more than
15 million pesos, more businesses are owned and managed by male respondents
which is 58%, and only 10% of business have been operating for more than 15
years.
The most influential factor affecting the growth of small and medium
enterprises is flexibility, since it requires the overall logic and adaptability of the
said venture in a fast paced industrial environment to gain growth, while
employment has the least influential factor in the demand of manpower can be
easily fulfilled due to the convenience of modernization, qualified job seekers can
even be found online in less than 24 hours. But these factors are still considered as
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highly influential because they are the basic needs and the foundations of a
successful business venture, Competition give you awareness of other competitors,
employment gives you the manpower to turn ideas into actions, globalization
resonates with time and change, innovation provides creativity to create or satisfy
demands in an efficient way, it also resonates with the remaining factors in
considering their relationship with time and change, years of operation can define
the overall performance, stability, and potential growth of a business venture with
numbers to provide detailed analysis for owners to determine their gains and
losses as the time goes by.
Recommendation
Through the findings of the study, the researchers came up with the
following recommendation:
Owners of small and medium enterprises should have a flexible working system in order
to provide quality services when needed by customers which make the workforce flexible
enough to adapt to changing business conditions. To raise morale and job satisfaction:
flexible working increases the morale of employers to perform at their utmost best
because they feel they are treated as adults who have control of their life and their time
and they tend to perform at their utmost best when they are at work.
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Researchers try to gather numbers on the training and skills of the people
such as crews who deliver manpower and managers who spearheads a business
company, essential skills such as; communication and negotiation skills, advanced
budgeting and accounting and tips on how to stay in good standing with creditors
and suppliers are things that are not taught in school, yet these skills are utilized by
every successful leader in the world of business and we need numbers to generate
a more specific result on the attributes of every owner/manager.
Future Researchers due to the diverse factors and unique features of every
business venture that is related to this field, it is recommended that they should continue
to study what we have started because the study is very interesting; it allows people to see
solid numerical statistics in evaluating myth’s when it comes to business and
entrepreneurship.
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University of San Agustin

Gen. Luna Street, Iloilo City, Philippines, 5000

Background of the Study

and medium enterprise in the national economy cannot be underestimated. These

world countries,partly because of growing disappointment with results of development

utilization of local raw materials, employment generation, encouragement of rural

development, development of entrepreneurship, provision of avenue for self-employment

and Powell, 2010).

Overall economic development, a critically important role is played by small and

competition has external benefits on economic efficiency, and productive growth.

institutional improvements (World Scholars, 2012).

Delmar & Gartner, 2006).

of business activity in an urban or rural area (Khalique, et al., 2011).

Since we are Business Management major Financial Management, we intended to be

to the growth and development of small and medium enterprises.

oriented owned businesses in Iloilo City by highlighting the problems faces by

grow, they would greatly affect the economy of Iloilo City.

competition, employment, flexibility, globalization, initial capital, innovation, and years

Statement of the Problem

enterprises in Iloilo City for the year 2018.

Specifically, this study seeks to answer the following question;

1. What is the profile of the respondents?

enterprises in terms of flexibility, competition, globalization, innovation and employment

capital, sex, and years of operation?

small and medium enterprises in terms of competition, employment, flexibility,

globalization, and innovation when the respondents are taken as a whole?

Hypotheses of the study

The null hypothesis was being tested;

growth of small and medium enterprises in terms of competition, employment, flexibility,

capital, sex and years of operation.

competition, employment, flexibility, globalization and innovation. According to Levy

jobs and country’s employment rate (Levy and Powell, 2005).

A key characteristic of an SME is flexibility, the ability to adapt to changing

owner (Levy and Powell, 2005).

The impacts of globalization as a factor to the growth of SMEs have pressured

organizations today is the increasing globalization of organizations and management.

drives growth (Hamann, 2013).

capital (Guffey, 2011).

Sex-based differences in each of these areas have a profound effect on economic

as economic agents (Klasen, 2012).

Paradigm of the Study

Independent Variable Dependent Variable

Initial Capital Competition

Years of Operation Innovation

Figure.1 Factors influencing the growth of Small and Medium enterprises

Scope and Limitations of the study

Street and Delgado Street, for 1st Semester, 2018-2019.

The study determines how dependent variables like flexibility, competition,

owners of small and medium enterprises in Iloilo City.

The researcher-made instrument IS used to determine the factors that influenced

owners of small and medium enterprises.

Significance of the study

The study is beneficial to the following:

evaluate and develop the growth of their enterprise.

they can use in their teaching.

guide in understanding their field of specialization.

conceptually and operationally:

Competition when two or more organizations act independently to supply their

products to the same group of consumer (Delmar, 2013).

Employment is an agreement between an employer and an employee that

employee will provide certain services (The Balance Career, 2016).

medium enterprises in Iloilo City.

Flexibility is an ability to adapt an operating system to respond to the changes in