The Enabling Environment of Micro, Small, and Medium-sized Enterprises (MSMEs) in Bukidnon, Philippines

Abstract

Introduction: MSMEs’ apparent contribution to the Philippine economy and ultimately to the standards of living of its populace makes it an important sector on its own. For context, these enterprises make up roughly 99.5% of the total number of business establishments in the country and contributing to 35.7% of the GDP in 2018 alone. This thus opens up the question: if these enterprises contribute so much to the well-being of the economy, why not then nurture more of them? While it may be the direction that the government ought to take, there are several challenges. Some of the factors contributing to SMEs' sluggish growth include poor communication structure (Fancisco and Canare, 2020), limited financial access, a lack of databases, low R&D spending, undeveloped sales channels, and low levels of financial inclusion (Yoshino and Taghizade-Hesary, 2016). These are some of the reasons that make it difficult and even unattractive for individuals to pursue entrepreneurial ventures. While there are several other factors that play a role, it has been challenging to grasp which aspect, of the many, truly deters the growth of MSMEs.

It is thus the aim of this study to shed light on what specific components of MSME’s enabling environment environment (Policy, Finance, Culture, Supports, Human Capital, Markets (Isenberg, 2011)) make it difficult for them to grow, prosper and expand.

Objectives: The aim of the study was to understand how MSMEs perceived their enabling environment and look into how their perceptions differed when grouped according to their enterprises’ business profile and the owners’ demographic profile.

Methods: A descriptive-correlational research design was used to analyze results from 429 randomly selected registered MSMEs in the province of Bukidnon, Philippines. A survey using a questionnaire (cronbach’s alpha = 0.95) was used to collect data. Profile of respondents (socio-demographic and business), and the enabling environment were analyzed using descriptive statistics. While significant differences in respondents’ enabling environment was analyzed using Independent One-Way Analysis of Variance with significant results analyzed further with post-hoc Tukey’s HSD.

Results: Majority of the MSMEs in the province of Bukidnon are classified as Micro. This means that these businesses mostly employ 1 - 9 employees. They're also predominantly owned by females aged 40 - 49 with college-level education, and are mostly married. Typically aged 1 - 3 years, primarily engaging in wholesale and retail trade. Based on these results, businesses in the province seem to have a hard time graduating from the 1 - 3 year age category.

The enabling environment is perceived as only moderately conducive which suggests that businesses don't necessarily find doing business in the province ecstatic. Which coincides with how majority of businesses in the locale find it difficult to sustain operations beyond the 1 - 3 year age. However, there may be other factors at play that this study could not reveal.

Results further showed that significant differences in perceptions of the enabling environment only emerged when businesses were grouped based on the nature of business and in which municipality they operated in.

Conclusions: While the enabling environment for MSMEs in Bukidnon is perceived as moderately conducive overall, there are significant variations across business types and municipalities that need to be addressed through targeted interventions. By building on the existing strengths in culture and finance, and by implementing sector-specific and location-sensitive policies and programs, stakeholders can work towards creating a more uniformly conducive environment that supports the growth, sustainability, and competitiveness of MSMEs throughout the province. This approach would not only benefit individual businesses but could also contribute to broader economic development and poverty reduction goals in the region.