The determinants of firm growth in selected SMEs in the NCR

• Main Author: Sarreal, Emilina R.
• Format: text
• Language: English
• Published: Animo Repository 2005
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_doctoral/125
• Institution: De La Salle University

Several personality, firm attribute, and macroeconomic-based approaches had been made to determine their influence on firm start ups and expansion. Studies had constantly claimed that successful entrepreneurs have far-reaching impact on economic development by increasing employment, fostering stability, escalating the tax base building capacity in developing countries, and reducing poverty. This study attempted to mix personality, firm attribute and macroeconomic factors through multidimensional growth model in ascertaining which variables significantly affected firm performance, personal growth of entrepreneurs, and economic growth. Primary data were collected through a survey of randomly selected SME owners and principal decision makers from the list provided by the Department of Trade and Industry-National Capital Region (DTI-NCR). These data were encoded and processed through SPSS software package using descriptive, correlational, and evaluative designs with the aid of the following statistical tools: frequency and percentage distribution, summary statistics (mean, minimum, maximum), chi-square test for mean differences, multiple and logistic regression modeling, and MANOVA (multivariate analysis of variance) for joint and separate interaction and main effects of the moderating variable. This study concurred with Gibb and Davies (1990) in Pistrui (2002) that formal assistance, including training and consulting, did not have any significant impact on firm growth due to lack of empirical validation and the government's inability to understand how external factors and constraints impacted firm growth. More importantly, entrepreneurship enhancing programs and policies in the Philippines were directed mainly to start up ventures rather than older firms uninformed of these programs and policies. Even the developed countries suffered the same fate as entrepreneurshipenhancing programs and policies they implemented have only resulted in modest levels of entrepreneurial activities. Through no fault of their own, institutions concerned with providing formal assistance and entrepreneurship support incentives (ESIs) failed to consider what entrepreneurs need in the context of their environments. The major findings of this study indicate that in the NCR determinants of firm, personal and economic growth differ from those which availed and did not avail of SME services: 1) The form of ownership, non-managerial experience, nature of business, and the firm's age are significant determinants of firm growth for respondents who availed of SME services; 2) Formal education, average achievement, attendance in product skills (PD) and leadership seminars, previous entrepreneurial experience, and form of ownership are significant determinants of personal growth of SME owners and principal decision makers who availed of SME services. Factors that influenced personal growth of respondents who did not avail of any SME services include attendance in networking seminars and product development seminars, form of ownership, age, gender, and non-managerial experience; 3) For those which availed of SME services, the nature of business is the only significant factor that explains their ability to contribute to economic growth. The form of ownership, nature of business and achievement orientation of SMEs that did not avail of SME services came out as significant factors that influence contribution to economic growth; 4) SME service provided by DTI is a significant moderating variable that affect firms sales, profit, regular and contractual employee levels when combined with non-managerial experience, achievement orientation, form of ownership and nature of business; 5) SME services exerted moderating effect on the form of ownership that influence personal growth through membership and leadership in trade associations; 6) SME services significantly exerted moderating effect on the nature of business, specifically the wholesale and retail trade firms, that influence gross value added (GVA) contribution. The findings of the study strongly recommended that the future environmental interventions undertaken by the government and SME owners should be consistent with the latters ability and propensity to enterprise, the type and source of managerial complexities they experience in their respective business sectors and their form of ownership. Thus, entrepreneurial and business seminars focusing on product development, industry briefings, leadership, and executive development programs should be made available to "emerging entrepreneurs" or SME owners who have low ability and high propensity to enterprise. On the other hand, the government should make socioeconomic conditions suitable for firm expansion and growth for "high growth entrepreneurs" or SME owners.