Sandoval Final Defense

De La Salle University Dasmarias
DRIVERS OF GROWTH OF TOP MICRO AND SMALL

AUTOMOTIVE PARTS RETAIL ENTERPRISES
IN CAVITE
A Research Proposal
Presented to the Faculty of the
Allied Business Department
College of Business Administration and Accountancy
De La Salle University- Dasmarias
Dasmarias, Cavite
In Partial Fulfilment
of the Requirements for the Degree
Bachelor of Science in Business Administration
(Major in Economics)
MIGUEL JOAQUIN S. SANDOVAL
January 2017
CHAPTER I
INTRODUCTION
Micro and small sized enterprises play a big role in the growth of a developing
countrys economy. According to the Organization of Economic Cooperation
Development, (OECD, 2004) these firms along with medium sized enterprises typically
account for more than 90% of all firms outside the agricultural sector. They constitute a
major source of employment and generate significant domestic and export earnings. As
such, micro and small enterprise development emerges as a key instrument in poverty
reduction efforts. These enterprises performance is essential in the development of the
economy of any country. These firms provide revenue, capital, investment and most
significantly employment in the local economy. In fact, according to the Department of
Trade and Industry (DTI) statistics, micro and small enterprises along with medium sized
enterprises generated a total of 4,930,851 jobs in 2012 versus 2,658,740 for the large
enterprises. This indicates that these firms contributed almost 64.97% of the total jobs
generated by all types of business establishments that year. Of these, 47.0% or 2,316,664
jobs were generated by micro enterprises; 41.8% or 2,061,090 by small enterprises; and
11.2% or 553,097 by medium enterprises.
Majority of the economic growth that the country is experiencing today is due to
the proliferation of micro and small enterprises in the recent years. In 2011, these firms
accounted for 32 percent of the countrys GDP. That is bigger than what the large
enterprises and big corporations like that of San Miguel and Ayala contribute combined.
According to DTI, as of 2012 count, there are 944,897 business enterprises
operating in the Philippines. Of these, 99.58% (940,886) are micro, small, and medium
enterprises and the remaining 0.42% (4,011) are large enterprises. Of the total number of
SMEs, 89.78% (844,764) are micro enterprises, 9.78% (92,027) are small enterprises, and
0.44% (4,095) are medium enterprises. This statistic shows that majority of the
enterprises in the country is greatly concentrated in micro and small sized enterprises.
Though the countrys SME sector is quite large, it remains to be unproportionate and
unbalanced.
Moreover, the micro and small along with medium enterprises in the country are
very well diverse. Most of the 942,92 of these enterprises in operation in 2014 were in the
wholesale retail trade and repair of motor vehicles with 436,809 business establishments.
Information and communication, financial and insurance activities, and other service
activities follow with 133,157 business establishments. Following with 126, 108 business
establishments is accommodation and food services. Second to the least is manufacturing
with 117,601business establishments and lastly with the least number of business
establishments are the human health and social services, professional scientific and
technical, education, administrative and support services, arts, entertainment and
recreation industries, and real estate with 105,927. (DTI, 2014)
The Asian Development Bank (2014) in one of their reports, stated that SMEs
are said to stimulate domestic demand through job creation, innovation and competition
making them a driving force behind a resilient national economy. To further stress the
importance of micro and small enterprises particularly in the country, it is said that one of
the major problems that cause slow growth and underdevelopment in the Philippines is
the lack in participation of these firms in the competitive local market due to the high cost
of doing business. The Philippine Chamber of Commerce and Industry (PCCI) cited that
promises of the Asean Economic Cooperation (AEC) have been muted by the limited
participation of the countrys small and micro enterprises. PCCI then urged the
government to lower business costs and transactions to provide complimentary support to
these enterprises.
In a similar study conducted by Philip, (2010) majority of the worlds businesses
are in fact SMEs and that they have a big role to play in any economy. Furthermore there
is much agreement among economists that a vibrant SME sector is one of the principle
driving forces to the development of a market economy. According to Morariu (2014)
however, European governments or decision makers view these enterprises as the main
driver for economic growth, innovation or technology spill-overs and again employment
generation and social integration. As a result European countries place high regard and
importance to SMEs.
Acknowledging the staggering increase of research and studies conducted about
SMEs in the past one or two decades, this particular research aims to bring down and
apply some of those ideas, concepts and theories obtained from those studies to the local
setting of the Cavite province. Accompanied by the abundant studies and reports
indicating the importance and significant benefits of SMEs, this studys purpose is also to
complement other research in the hope of obtaining a deeper understanding on the
phenomena of micro and small enterprises and their growth.
Background of the Study
The National Capital Region (NCR) held the most micro and small enterprises in
operation in 2012 with 210,576 business establishments. It is seconded by Region 4-A
(Calabarzon) with 144, 811 business establishments, followed by Region 3 (Central
Luzon) with 105,331 business establishments followed by Region 7 (Central Visayas)
having 65,637 and lastly Region 6 (Western Visayas) with 53,746 business
establishments. (DTI, 2014) Furthermore, majority (49.7%) of the enterprises in the
country are engaged in wholesale, retail trade and repair of motor vehicles. (SEPO, 2012)
The automotive industry sector in the Philippines is booming. With the
Philippines currently ranked third on the fastest-growing automotive markets in Southeast
Asia, (according to the ASEAN Automotive Federation) the promise of growth and
development for automotive parts retail SMEs is strong. Just last year in 2015, Philippine
vehicle sales rose 23% while the neighbouring countries like that of Singapore rose 67%
followed by Vietnam at 57%. These statistics can indicate that more people will be
owning vehicles and that auto supply shops may potentially be affected. Taking into
account the ASEAN integration as well, these micro and small enterpprises in the
Philippines get a broader market for their sales and services as well. (Mercurio, 2016)
To add, the Comprehensive Automotive Resurgence Strategy program established
in 2015 will most likely stimulate the local market and industry over the coming years.
The program focuses on the manufacture of three new models of four-wheeled motor
vehicles which will have a minimum volume of 200,000 vehicles with a model life of a
maximum of 6 years. (Chua, 2015) This would bring more opportunities for the local
micro and small automotive parts retail enterprises to expand and grow due to the local
industry stimulation.
According the president of the Federation of Automotive Industries of the
Philippines, Vicente Mills Jr., there are three reasons why the Philippine automotive
market is growing. The first being that the vehicle density of the Philippines is low
compared to other neighbouring ASEAN countries. Second, borrowing cost is going
down and availability of credit is going up. People now have more purchasing power to
buy cars compared to 10 or 20 years ago. And lastly, down payments are going down due
to the very tight competition.
Cavite has also been experiencing growth in volume of vehicles. In the recent
years statistics show that annual registration of automotive vehicles in Cavite have been
increasing and that almost 100,000 (cars, utilitily vehicles and sports utility vehicles)
register annually at the local LTO (Land Transportation Office). Data is shown in more
detail at table 1. (CaviteGov, 2015)
The facts about the automotive industry are very promising. The rapid growth can
only mean to improve and strengthen the local automotive parts retail enterprises in the
Philippines. With the automotive market looking to be very competitive by 2020,
(Mercurio, 2016) this can only mean that there will be more people with vehicles and
consequently more people who will need automotive parts and services.
Now there have been extensive studies done internationally and locally in the
study of the micro and small enterprise phenomenon. These studies include the
descriptive research designs that define what these firms are and how they operate. They
also include explanatory or causal research deigns that identify what factors or variables
affect the performance and success of these firms. Furthermore it is important to
acknowledge that these studies define and measure performance and success of these
enterprises differently varying from being highly qualitative and highly quantitative.
A study done by Mendoza (2015) described the financial health of 99 SMEs in
the CALABARZON region of the Philippines. He studied their financial health in terms
of liquidity, leverage, activity and profitability. The results of his study showed that
SMEs generate low profitability but are sound in their leverage, activity and liquidity. No
significant relationship was found between profitability with leverage, liquidity and
activity. Recommendations from his study suggested that these firms revisit their
strategies to maximize profit.
Since the study of Mendoza on the SME phenomenon is highly quantitative in its
efforts to measure the financial health of these firms, it is only fitting to look at a
qualitative perspective as well. Sarreal (2011) researched the determinants of growth of
SMEs in the NCR (National Capital Region) of the Philippines using a majority of
qualitative variables. Personality, the firms attributes, and other macroeconomic factors
were some of the variables used in her study. Sarreal further extends the study to include
the effect of formal government assistance on the firms growth. She opines that
entrepreneurial capability and form of ownership had direct influence on sales growth
and that government assistance had no significant effect on the firms growth.
Another study on SMEs conducted by Philip (2010) determines the factors that
affect business success of small and medium enterprises in Bangladesh, a developing
country like that of the Philippines. It is unclear as to how his study measured business
success but the results showed that a number of qualitative variables were of significance
to business success. The variables were: characteristic of SMEs, management and know-
how, products and services, the way of doing business and cooperation, resources and
finance, and external environment. The study further suggested that the most significant
factors affecting business success of SMEs in Bangladesh were products and services, the
way of doing business, management know-how and, external environment.
Although there is significant research on the success and failures of SMEs, like
that of Philip, (2010) Sarreal (2015) and Mendoza, (2015) their studies all pertain to
SMEs in general. What this study intends to focus on is micro and small enterprises
particularly in the automotive parts retail business. The outcome of this research will be
of value in shedding light on the characteristics and growth drivers of the top micro and
small automotive parts retail enterprises in Cavite Philippines.

Statement of the Problem
In the 2011-2016 Philippine Development Plan published by NEDA, it stated that
to achieve inclusive growth for the country, emphasis on employment generation whether
in the form of formal wage or self-employment is vital. As discussed earlier in this study,
micro and small enterprises contribute a large percentage of the countrys employment
generation capabilities. To elaborate further, the success and failure of these firms have
significant impact on the immediate economy. Given the importance of these firms, it is
alarming to know that these firms are lacking in returns and profitability and contribute
low value to the local economy. (SEPO, 2012)
Further studies also suggest that many firms struggle to survive and even dissipate
during the early years of operations. (Bhattacharya, 2015) To give a concrete example,
there is another classification under micro enterprises particularly in the service sector
that is called cottage industries or smaller business people who have one to five-person
types of operations. It is these cottage industries particularly in the region 4A
(CALABARZON) that usually close down or do not develop due to the limited
information and knowledge on the market and industry.
NEDA in its development plan also recognized that the growth of the SME sector
has not been vigorous enough to propel the economy. The size-distribution of firms has
changed little in the past two decades, with the proportion accounted for by medium sized
enterprises remaining small. As a result the countrys industry structure is often
characterized by a missing or hollowed middle.

Although these firms seem abundant in the Philippine market, they are not
immune to vulnerabilities and shocks. Despite the importance of these firm s in the
Philippine economy, micro and small sized enterprises, particularly in the automotive
sector operate in a volatile environment that is not conducive for business survival.
Although the bulk of the automotive parts and components sector in the Philippines are
composed of small supply firms, they have varying capabilities and heavy issues
concerning quality. These firms fail to develop due to insufficient capital and technology
necessary for their improvement of their products. (Aldaba, 2007)
Just in Dasmarinas Cavite alone, simple observation over the past three to five
years indicates that quite a few number of the micro and small scale businesses in the
local setting have remained or grown today. Growth of these firms in the automotive
supply industry is volatile and unclear most especially in the suburban and developing
areas of the country like that of the CALABARZON region or region 4-A particularly in
Cavite.
Wiklund (2007) expresses the opinion that despite the staggering increase in
volume of research on SME growth, recent literature suggest that little or incomplete
facts are known about the phenomenon. Although to date, there is abundant academic
research on the measurement of growth of SMEs like that of (Allen, 1970), (Glancey,
1998) and (Bhattacharya, 2015), these studies are based on different growth perspectives.
However this study aims to integrate the different perspectives on small firm growth and
concentrate on the growth of the local micro and small automotive parts retail enterprises
in Cavite and the characteristics or drivers that promote it.

Given the present circumstances of the micro and small automotive parts retail
enterprises in the country, this research will seek to answer certain questions concerning
the problems that these firms face.
Specifically, the study aims to answer the following questions
1. What is the profile of the respondent managers of the micro and small automotive
parts retail enterprises in Cavite?
2. What is the profile of the of the micro and small automotive parts retail
enterprises in Cavite?
3. What are the relationships between the drivers of growth of these micro and small
automotive retail enterprises in Cavite?
4. What are the factors that drive the growth these micro and small automotive retail
enterprises in Cavite?
5. What are the differences in terms of growth of the micro and small automotive
retail enterprises?
Objectives of the Study
The main objective of the research is three-fold; it is to provide a better
understanding on the development and growth of local micro and small enterprises in
Cavite, to develop a growth model that would be applicable to these enterprises
especially in the auto parts retail business, and to contribute and add to the literature on
the phenomena of SMEs. Examination of these firms particularly on how they manage
themselves is key to arriving at a definitive conclusion to the main objective of the

research. This will allow for significant recommendations that will ultimately contribute
to the development of these firms.
Consequent to the research aims, this study comprises of the following objectives:
1. To describe the profile of the top micro and small automotive parts retail
enterprises in terms of:
gender,
role,
age,
civil status,
location
and number of dependents.
2. To describe the attributes of the top micro and small automotive parts retail
enterprises in terms of:
years of operations,
initial capitalization,
manner of establishment,
human capital,
source of supply,
network resources,
access to financial capital

and initial and current number of full time employees.
3. To ascertain the environmental factors of these micro and small enterprises in
terms of:
Internal
Motivation
Growth Importance
Goals
Innovation
Risk Tolerance
Proactiveness
External
Dynamism
Heterogeneity
Hostility
Income classification of city or municipality
4. To identify the attributes and environmental factors that drive the growth of the
top micro and small automotive parts retail enterprises in Cavite.
Hypothesis of the study
. A good number of research today deals with the growth of small firms and the
factors and elements that contribute or trigger it. On the other hand, other literature
focuses on the different characteristics of high growth and successful SMEs (Heimonen,
2013) On the other hand, this study intends to examine the drivers of growth of top micro
and small automotive parts retail enterprises in the province of Cavite and other factors
that affect it. Given that this study aims to integrate different growth perspectives, it will
employ different variables from different growth perspectives.
Wiklund, Patzelt, & Shepherd (2009) in their study to build an integrative model
for small business growth suggest that there are five theoretical perspectives for growth;
namely, entrepreneurial orientation, environment, strategic fit, resource and growth
attitude. In line with this, the study will use variables that would come from each of those
growth perspectives and in effect formulate a new integrative model for the analysis of
the growth of the SMEs concerned in this study
Mashayo, (2006) expressed that the measurement of a firms growth can be
horizontal (expansion, increase in number of establishments, increase in product line etc.)
or vertical (Number of employees, turnovers, sales). A good number of literature (Farouk
& Saleh, 2011), (Pechlaner et.al, 2004), (Bhattacharya, 2015), and (Hashi & Krasniqi,
2010) measure growth vertically and majority of these studies measure in terms of
turnover and number of employees.
Looking at the study of Pechlaner et.al (2004) of SMEs in South Tyrol, Italy, they
suggested that SMEs have an average growth rate (in terms of turn over) of 17.4%. On
the other hand, Hashi & Krasniqi (2010) in their study of laggard economies in South
East Europe, opined that SMEs have an average growth rate (in terms of employment
size) of 22.19%.
There are a number of literatures that suggest that entrepreneurial orientation in
businesses drive growth and that entrepreneurial orientation and growth actually seem to
go together. Entrepreneurial orientation consists of many other factors and one of its
biggest factors is innovation. Some would argue that innovation facilitates growth which
in turn generate employment and economic growth. (Ahlstrom, 2010) Other studies
suggest that innovation is inherent in small and medium firms because they are
considered to have high capabilities for creating, inventing, and exploiting innovations.
(Heimonen, 2013) Older theories like that of the Schumpeterian growth theory state that
businesses and firms actually promote growth and development through the gale of
creative destruction through innovation and new technologies. Later theories also reflect
this sense in that new innovations from small firms help stimulate growth through
disruptive innovation. (Ahlstrom, 2010) Given the literature that support
entrepreneurial; orientation as a compliment if not a driver for growth, the following
hypothesize is formulated;
H1: Entrepreneurial orientation positively affects the growth of the top micro and
small automotive parts retail enterprises in Cavite.
Some literature suggests that the environmental factors of the business accounts
for a large percentage for the growth of the firms. (Audretsch, 2012; Wiklund et al, 2009;
Davidson et. al, 2005; (Balboni, Bortoluzzi, & Tivan, 2014) A study conducted by
Glancey (1998) on determinants of growth and profitability suggested that the location of
the business affects its growth. The study further postulated that rural areas may be more
suitable for business growth than urban areas due to the latter having higher factor prices
due to greater competition for factors of production.
Wiklund et al, (2009) cited that hostile environments significantly reduce the
opportunities for firms to grow due to the rivalry that decreases the demand for the firms
products. Therefore locations where business competition is fierce will also affect firm
growth. Hence, the hypothesize;
H2: The environment affects their growth of the top micro and small automotive
parts retail enterprises in Cavite.
Numerous literatures attribute a significant relationship between the firms
characteristics or attributes and its growth. These studies focus on the firms
organizational dimensions as a determinant to its growth and ultimately its success as
well. Almost always the use of age and size as the physical characteristic variable is used
in these studies.(Bhattacharya, 2015; Glancey, 1998; Heimonen & Virtanen, 2012;
Santiago, 2011) On the other hand, more often than not, type of ownership is used as the
natural attribute variable. (Sarreal, 2011; Wiklund, 1998) But along with type of
ownership, another natural attribute that this study examines is the kind of business of the
firm (Family or individual start up). This particular characteristic was identified in
Heimonen & Virtanen's (2012) study on the characteristics of high growth and high
success SMEs wherein he suggested that family ran businesses rely on internal resources
while individual start up business seek out venture capital investments. Thus the
relationship of this construct to growth will also be considered.

H3: Organizational dimensions affects the growth of the top micro and small
automotive parts retail enterprises in Cavite.
The resources that are available to the firm pose a substantial effect on their
growth and development. (Alvarez & Busenitz, 2007; Mishra & Zachary, 2013;
Takahashi, 2002) Recent studies have shown that firms having little or no access to
resources, be it financial or other types of resource seem to have less growth and less
competitive compared to firms with access to resources. (Conner, 1991) Common in the
research on resources and growth is the fact that resources are needed to compliment the
business to achieve growth and its objectives. Central to the resource based view on frim
growth is the management and allocation of the resources available to it. In the final
phases of growth, according to Griener, (1998) the firms efficient allocation of its
resources is the driving force of growth. (Davidsson, Achtenhagen, & Naldi, 2005)
Hence;
H4: Resources positively affects the growth of top micro and small automotive
parts retail enterprises in Cavite.
Studies done on the side of the entrepreneur as a factor to firm growth seem to
single out entrepreneurs attitude aside from his or her acquired human capital. (Balboni
et al., 2014; Davidsson et al., 2005; Hoxha, 2013; Wiklund et al., 2009) The study
conducted by Balboni et al. (2014) on growth drivers of firms in the technological sector
suggests that entrepreneurial factors are growth drivers to start-up firms. In their review
of literature they cited that the attitude of the entrepreneur to firm growth explain for
growth differentials between new ventures in different sectors and countries. Hoxha
(2013) on the other hand suggests that the attitudes and behaviour of the entrepreneur
have a significant relationship with the firms entrepreneurial activities that ultimately
affect its growth. Thus the last hypothesis of the study is:
H5: The owner or entrepreneurs attitude affects the growth of top micro and small
automotive parts retail enterprises in Cavite.
Significance of the Study
The motivation for this research arises from the gap identified in the growth and
development of micro and small enterprises in the Philippines particularly in Cavite.
While the study aims to contribute knowledge and insight on the betterment of micro and
small automotive parts retail enterprises, it is not limited to that sector in the sense that
the study is applicable not only to that particular enterprise sector in Cavite but to all
micro and small enterprises in the country.

The research done in this study hopes to contribute to the betterment or
improvement of the small time automotive parts retail enterprises in Cavite. By analysing
their growth factors and growth drivers, the study hopes to help those entrepreneurs who
are planning or thinking of starting a small business in Cavite. Underlying the importance
of certain characteristics and factors that affect the growth of these enterprises, policy
makers and other government authorities would be able to create and revise policies for
the improvement of the state of these firms.
Current micro and small enterprise owners can better operate and manage their
businesses through this study. Identifying important factors, owners can improve the
profitability of their businesses and create more income and employment to the
improvement and betterment of the society as a whole. Consequently the study also hopes
to encourage more entrepreneurs to start their own businesses and generate income and
investment to the local economy.
Non-Governmental Organizations (NGOs) and other development institutions and
organization that deal with poverty reduction and inclusive growth will also benefit from
this study as micro and small enterprises play a major role in both aspects especially in
the local economy of the Philippines.
The research conducted will benefit students and other scholars in the analysis of
the local situation of the many small time business establishments in Cavite. The study
will also add to and contribute to the existing large pool of research on the SME
phenomenon.
It is also hoped that Municipal government of Cavite will use the results of this
study to develop polices and strategies that will guide the planning for micro and small
enterprises within Cavite and hopefully the national government as well for the other
provinces in the Philippines.
Scope and Limitations of the Study
The main focus of this study is the analysis of the firm growth of top micro and
small automotive parts retail enterprises in Cavite. Growth is measured by change in
employment size and change in total assets. Consequently growth in terms of sales,
turnover and profit were not examined. This is because the data required for the analysis
of those variables is very sensitive given the nature of the businesses. As a result it would
be quite difficult to obtain the required data. No other measurements are considered in the
analysis of growth of the micro and small eneterprises to avoid possible errors and
discrepancies in the econometric model.
Acknowledging that there are many definitions for microenterprise and small
enterprise and that there is no actual universal meaning for the term, this study uses the
term based on the Senate Economic Planning Office of the Philippines definition for
SMEs. Moreover, it classifies the enterprises into Micro, Small and Medium sized
businesses by only one criteria which is asset size. The study did not choose to classify
the firms into micro and small enterprises by employment size due to classification by
asset size being a more distinct criterion in the local business setting of Cavite for the
automotive parts retail firms of concern.
Moreover although the term SME is used in various literature of this study, it is
appropriate to clarify that the automotive parts retail enterprises studied in this research
are only micro and small enterprises due to the substantial portion of the population of
concern in Cavite being small and microenterprises. On the other hand, large and medium
sized enterprises are excluded from the population of the study.
Given that this study focuses on automotive firms as the enterprises to be
examined, it is important to address its use and exact scope. For the purposes of this
study, the automotive firms used herein include only those that deal in retail of
automobile parts (auto parts). Excluded in this study are those that manufacture or
assemble auto parts and the vehicle itself and those that offer repair services. The purpose
of this is for the simplification of the study and the avoidance of accidentally including
into the sample size a large enterprise due to the fact that most manufacturing firms in the
Philippines are large enterprises.
The locale of the study as stated in the title is the province of Cavite in the
Philippines. Hence all cities and municipalities of the province were included in the
sample size for the study. No other locations were considered regardless of their
proximity to the province.
Although the timeframe for this study was conducted in the years 2016-2107, the
period of analysis for the growth of the enterprises will depend on the data given by the
respondent. This is because of the constraint of the study that does not allow for free and
easily accessible data. Since the concern of this study is growth and its drivers, the
research required time series cross sectional data to measure the variables.
This research will depend on primary data gathered through the use of surveys
and questionnaires. Consequently the data needed for analysis will depend on the
respondents knowledge and willingness to answer and divulge information. The analysis
is then dependent on the amount of data given. Thus, accuracy of the data will also
depend on the respondents.
Definition of Terms
The following terms are defined for better understanding of the reader on the
studys perspective:
Attitude refers to one of the main independent variables and theoretical constructs in this
study. It is the attitude of the entrepeneurs in this study towards the growth of
their businesses. It is measured by the motivation, goals and behavior of the
entrepeneur that can affect the growth of the firm.

Automotive Parts Retail refers to the industry of concern in this study. It is the
businesses who deal in the retail of automotive parts.
Drivers of Growth refers to the independent variables in this study. They are the factors
that affect the firm level growth of the enterprises of concern.
Dynamism refers to one of the measures for the environemntal construct in this study. It
is the rate of activity, progres and change in the market of the enterprises of
concern in this study.
EO (Entrepreneurial Orientation) refers to one of the main independent variables and
theoretical constructs in this study. It is the enterprises entrepreneurial activity
that is reflected in its strategies. It is measured by three other variables;
innovativenes, proactiveness, and risk-tolerance.
Environment refers to one of the main idnependent vaiables and theoretical constructs in
this study. It is the external factor of the enterprise and is measured by four other
variables; hostility, dynamism, heteroginity and location.
Growth refers to the main independent variable in this study. It is measured by the
change in the micro and small enterprises total assets and change in total number
of employees.
Heterogeinity refers to one of the minor variables of this study and is one of the
subordinate variables for environment. It is mesured by the degree of
diversification among the products of the enterprises in this study.

Hostility refers to one of the minor variables of this study and is one of the subordinate
variables for environment. It is measured by the degree of competition that is met
by the enterprises in this study.
Innovativeness refers to one of the minor variables in this study and is one of the
subordinate variabes for Entrepreneurial orientation. It is measured by the degree
of creativity and drive of the enterprise to seek new and better methods and
products for the business.
Micro and Small Enterprises refers to the enterprises of concern in this study. It is
comprised of microenterprises which have an asset size of not more than
3,000,000 and small enterprises which have an asset size that is more than
3,000,000 but not more than 15,000,000.
Proactiveness refers to one of the minor variables in this study and is one of the
subordinate variabes for entrepreneurial orientation. It is measured by the degree
of proactivty of the enterprise to overcome competitors.
Resources refers to one of the main independent variables and theoretical constructs in
this study. It is the resources that are available to the enterprises of concern in this
study. It is measured by three other minor variables; the firms immediate
resources, the entrepreneurs human capital and the firms network resources.
Risk-tolerance refers to one of the minor variables in this study and is one of the
subordinate variabes for entrepreneurial Orientation. It is measured by the degree
to which the enterprise can tolerate and take business risks.

Top refers to the enterprises which have the largest asset size in the population.
CHAPTER II
REVIEW OF RELATED LITERATURE
There have been quite a number of studies, journals and articles done on the
importance of miro and small enterprises in the general economy. In a journal released by
the Senate Economic Planning Office, these enterprises are said to be very important in a
developing economy. They help reduce poverty by providing employment and spur
development in far-flung and rural areas. Thus, a growing and active micro and small
enterprise sector indicates a growing economy. (SEPO, 2012) In a similar journal report,
these firms are also defined as a major role in economic growth even in developed
nations. They provide most of the new jobs in the OECD area which account for 60% to
70% of employment in most countries. (Oecd, 2000)
To add, it was stated that in the recent decade these enterprises are recognized as
an important sector in achieving economic development. Thus, there have been a good
number of governments and development organizations that have focused on the
promotion of these firms as a way to stimulate broader participation in the private sector.
(Nyangori, 2008) The importance of these firms as a major economic driver has aroused
some interest from international organizations and academic researchers whose goal is to
use public policies to trigger growth in micro and small enterprises. In fact since the
1970s a good number of researches have been conducted to explain the framework for the
growth and improvement of these firms (Farouk & Saleh, 2011). Despite the importance
of these firmss, DTI reports that the value-added contribution of the local SMEs to the
Philippine economy is relatively low at 32%. Thus, due to the concern on the impact of
SMEs on the local economy, the government led by DTI pushed for greater support for
them. Consequently, in May 2008, Republic Act No. 9501 was amended to promote
greater business activity. (Santiago, 2011)
Indeed there has been much research on the financial constraints of micro and
small enterprises in the recent years. According to a study by Penrose, (1959) business
failure rates are higher in the SME sector, more so for those firms operating in volatile
environments which is caused by the firms limited access to financial support systems.
Moreover, these enterprises are unable to access funds due to their limited track record,
unacceptable collateral capabilities, and inadequate financial statements [ CITATION
Ald12 \l 13321 ]. An article released by (SEPO, 2012) made it clear that financial
constraints is the biggest barrier that hinders micro and small enterprises growth and
development in the local setting. Although funds have been made available by the
government financial institutions and private banks, these firms still have difficulty
accessing these funds due to reasons stated by Aldaba. These studies support the need to
further improve the financial and growth capabilities of micro and small enterprises.
Profitability studies of micro and small enterprises and firms in general are
significant and prominent today. There have been quite a number of researches done on
identifying the determinants, factors, and current level performance (in terms of
profitability) of these firms. In a study conducted by (Yazdanfar & Ohman, 2015) they
stated that there is a significant correlation between firm growth, profitability and size.
Firms with higher growth are characterized by greater profitability and larger size. It is
important to note though that this study was done in the foreign setting of Sweden. The
findings of (Rasiah, Yoon, Tong, & Kim, 2014) coincide with the latter reiterating that
growth contributes greatly to profitability in both medium and small enterprises but
diverge in the context that firm size affects profitability. This is because their findings
support Gibrats law which states that size and growth are independent.
Since these enterprises play such a vital role in the development of an economy,
small firm growth has attracted considerable attention in the recent years. (Wiklund et al.,
2009) Given the fact that these firms are mostly sole proprietorships, they start small and
have difficulty in achieving long term growth to grow into medium and eventually to
large companies.(Santiago, 2011) Consequently, many studies and researches have
focused on factors, determinants and even trends in small firm growth. Most widely
accepted researches in this topic used personality of the entrepreneur, the firms
attributes, and other macroeconomic factors to determine SME growth. [ CITATION
Sar11 \l 13321 ] In the study of Sarreal, a wide range of qualitative factors were taken
into account for SME growth. These factors ranged from the nature of the business and
form of business, to the personal characteristics of SME owners and their capacity to
avail SME services provided by the government. Her finding concluded that the services
that the government offered did little if not anything at all in the growth and development
of SMEs. This contradicts with the study of (Nyangori, 2008) where she highly
recommended government aid and SME services to owners for development.
Another study attributes growth to different conditions and forces. Santiago
(2011) suggested two factors in determining firm growth; evolutionary theory life-cycle
and socio-politico-economic conditions. This study contributes an unconventional way of
determining growth which deviates from the majority of quantitative research of
determining firm growth. In her own words she said that Business longevity is not a
singular formula but a case of a multidimensional model.
Indeed there is no lack in the literature for small firm growth today as it is a
research area that has attracted substantial attention in the recent years. Despite this much
literature still lack in the conceptual development for small firm growth and thus
knowledge on this aspect remains limited (Davidsson et al., 2005; Hoxha, 2013; Segarra
& Mercedes, 2014). Consequently, a good number of literature have surfaced attempting
to integrate other theories and literature and better enlighten the phenomena of SMEs and
their growth. (Farouk & Saleh, 2011; Gancarczyk & Zabala-iturriagagoitia, 2015; Islam,
Khan, Obaidullah, & Alam, 2011; Wiklund, 1998; Wiklund et al., 2009)
Gancarczyk & Zabala-iturriagagoitia, (2015) attempted to clarify and extend
further the literature on the growth process firms. They focused on three perspectives;
studies on growth determinants and predictors, studies on stage models, and studies on
the growth process. They further postulated that these perspectives can benefit one
another through application to the different streams and their interrelation. Their paper
also different gaps in the literature of growth process of firms which were issues
associated with entrepreneurial ecosystems and learning capability and development.
Despite the different models, theories and studies that seek to improve the current
knowledge on small firm growth, no model has been developed to date that can
adequately explain why some SMEs grow and some do not. (Farouk & Saleh, 2011)
Though this may be the case, there have been substantially interesting attempts to fully
explaining small firm growth.
Concerning integrative models that explain small firm growth, Wiklund et al.
(2009) developed a simple yet adequate model. He divided the different theoretical
perspectives into 5 separate ones and suggested that each of those perspectives explains
and accounts for majority of the literature done today on small firm growth.
Entrepreneurial orientation, environment, strategic fit, resources, and growth attitude

were the perspectives in the model. They further suggested that each perspective have a
given implicit effect on growth and can actually affect each other as well.
The relationship between growth and the entrepreneur has been of particular
interest in the recent years. Small firm growth has been found to be strongly linked to
entrepreneurial attitudes and ventures. (Davidsson, Achtenhagen, & Naldi, 2010) This
theory on firm growth was only strengthened by Wiklund et. al study on firm growth that
introduced the EO (Entrepreneurial Orientation) perspective on firm growth. In their
study they explained how entrepreneurial decisions and other activities affect the growth
of the firm. Though the exact relationship between the two are unclear, (Davidsson &
Henrekson, 2002) other literature would argue that firms and individuals can be
entrepreneurial and that a degree of the small firms growth can be linked to its
entrepreneurial activities. (Wiklund et. al, 2009) A scholar once said that growth is the
very essence of entrepreneurship (Sexton, 1997) and so others would suggest that
growth is the criterion that distinguishes entrepreneurial and non-entrepreneurial firms.
(Birch, 1987)
Innovation plays a substantial role in the link between growth and entrepreneurial
activity. As such, firm growth is an aspect of entrepreneurship if it is achieved through
the introduction of new products or services (Davidsson et al., 2010). Innovation is
defined by Heimonen (2013) as intellectual property rights like that of patents, utility
models, registered designs and trademarks though he also define innovation as the
introduction into a group or organization of new ideas and processes that are beneficial to
the individual or society. His study on high growth and high success firms attributed their
growth and success on the innovation that the firms employed.
Furthermore the importance of innovation on firm growth was examined by
Segarra & Mercedes, (2014). They stated that the link between innovation and growth is
important for economists and policy makers because it improves the understanding of the
determinants of firm growth and also identifies implications for industrial policy. To
emphasize, the innovativeness of growing firms has been discovered to be important for
value and job creation. (Heimonen, 2013) Despite this, they concluded that the effects of
innovation like that of R&D on growth differ between R&D sources and industries.
Although investment in innovation is important for fast growing firms, it is not
significant for slow growing firms.
External factors can also significantly affect firm growth. There have been quite a
number of studies as well on the link between external factors and firm growth,
(Davidsson et al., 2005; Gancarczyk, Zabala-iturriagagoitia, Gancarczyk, & Zabala-
iturriagagoitia, 2015; Lisowska, 2015; Nedu Osakwe, Chovancova, & U. Ogbonna, 2015;
Philip, 2010; Segarra & Mercedes, 2014) but as the literature narrows, certain external
factors of the firms immediate environment surfaces as one of the most prominent and
important amongst many.(Beck & Levine, 2005) The results of a study done on SMEs in
Kosova by Hoxia (2013) suggest that informal barriers emerge in different forms
especially in the absence of institutional and regulatory framework and thus ultimately
hinder SME growth. This emphasizes that the external environment for small businesses
play a crucial role in their development.

Given the strong influence of the external environment on firm growth, this study
also focuses on the link between the firms immediate location and its growth. This link is
undoubtedly widely researched as well. A good number of studies assess the
environmental influences of location, industry, and market on performance. (Audretsch,
1995; Heimonen, 2013; Heimonen & Virtanen, 2012; Hoxha, 2013) The results from
Heimonen and Virtanens study on Gazelles (High growth and high success firms)
showed that amongst other factors like branch of industry, employment growth and
innovation, location proved to be highly influential on the growth of the firms. On the
other hand, the link between growth and location is still highly debated. Hoxha (2013)
contradicts the theory in his study on the growth of small firms in extreme, transitional
and marginal environments. He argues that his results showed that the location of where
the firm operates does not significantly affect the fast growth of the firm. He further
implied that firms located in urban and rural areas have the same capabilities to grow.
Glancey (1998) on the other hand, suggests otherwise. In his study on determinants of
small firm growth and profitability, his results coincide with Heimonens and reflected
that location significantly affects firm growth, such that firms operating in urban areas
grow at higher rates than those operating in rural areas due to competition and higher
costs in urban areas.
Resources also play a significant role in the literature to understanding small firm
growth. A big portion of the studies done in the recent decades are focused and based the
resource based perspective (RBV) which can be attributed to Edith T. Penrose (1914
1996) on her book The Theory of The Growth of The Firm (Penrose, 1959, 1980, 1995,
2009). In fact it has been suggested that RBV theories may be important to understanding
entrepreneurial phenomena. (Alvarez & Busenitz, 2007; Conner, 1991) Literature based
on this view have proliferated the subject on firm growth and a good example of this
would be Nobuo Takahashis (2015) paper on Penroses theory where he hypothesized
that the key to Penroses theory is that economies of growth occur when there are unused
start-up expert managerial services.
The resource perspective can be wide and broad when it comes to its scope due to
the fact that resources can come in many forms and in many ways. (Mishra & Zachary,
2013) The studies done today on this perspective seem to focus on the resource that is the
education and experience of the owner, the resource that is the firms access to financial
capital, and the resource that is its network and business ties. (Hartarska & Gonzales-
Vega, 2006; Raz & Gloor, 2007; Santiago, 2011; Sarreal, 2011; Wiklund et al., 2009)
Thus individual traits such as education and prior industry experience could be crucial in
providing the firm with the right strategies, the external finance, and the right business
networks needed for the firm to grow. (Birley, 1985; Cooper, Woo, & Dunkelberg, 1988)
As the arms-length quantitative studies of determinants of firm growth do not
shed much light on understanding the phenomena from a process point of view,
(Davidsson et al., 2005) qualitative aspects such as the growth attitude of the owner or
entrepreneur can very well shed some light on the matter. In entrepreneurial literature,
Sexton and Bowman-Upton (1991) argue that growth attitudes of the business owners
and managers directly affect the firm growth of the enterprise because they are the ones
responsible for setting the limits to the growth that the firm will achieve. To add, Wiklund
(1999) and Zahara (1991) further postulate that the willingness to innovate, the
propensity of the entrepreneur to take risks and try out new and uncertain solutions and
the entrepreneurs proactive attitude toward growth are factors that significantly affect
firm level growth. As so, the entrepreneurs traits such as his or her attitude towards
growth may be expected to drive small firms toward higher growth and performance.
(Balboni et al., 2014)
The literature cited in this study all contribute to the better understanding on the
phenomena of micro and small enterprises and their growth. This study hopes then to be
guided by the literature and use it to obtain positive and substantial results and
conclusions on the growth of the top micro and small automotive parts retail enterprises
in Cavite.
CHAPTER III
FRAMEWORKS OF THE STUDY
Theoretical Framework
The objective of this theoretical review is twofold. The first is to review the
theories behind the suggested by other theoretical frameworks that are involved in the
firm growth process. The second is to cite the theories behind the variables and their
respective relationships with each other.
One of the prevailing theories behind the constructs of this research is the RBT or
resource based theory on firm growth. The theory basically implies that the competitive
advantage of the firm lies primarily in the application of valuable tangible or intangible
resources available to the enterprise. According to the RBV developed by Barney, (1991)
the resources pertained to in this view are assets, capabilities, organizational processes,
firm attributes, information and knowledge. Furthermore, the RBV he developed divided
the resources into three categories; physical capital, human capital and organizational
capital. (Barney, 1991) As such it seen as an extensively broad theory on firm growth
which can actually relate to other growth theories and models. This view and theory can
then be extended to entrepreneurial orientation growth models and has actually been
reflected in entrepreneurial research. (Wiklund & Shepherd, 2003) Other than
entrepreneurial growth theories, the RBV can also be related to human capital based
theories on firm growth. Here the RBV suggests that experience, knowledge, educational
attainment, training and the like are important resources that are responsible for the
growth of the firm.
As stated earlier, entrepreneurial growth theories characterized by the
entrepreneurial orientation perspective plays a major role in this study as well. This
model bases the firms growth on the firms entrepreneurial activities, strategies and
attitudes. It argues that growth comes from the innovation of firms and their willingness
to try new ideas despite the risk that is involved. This theory brought out emerging
streams of growth processes that refer to why and how growth is fostered through
proactive entrepreneurial actions and decision making. (Gancarczyk & Zabala-
iturriagagoitia, 2015) Innovation is highlighted in this theory in the sense that it is
strongly correlated with entrepreneurial activities and attitudes. Some scholars on this
theory would even argue that the reason for the existence of the firm is the fruition of the
entrepreneurs innovative capabilities. (Sexton, 1997) This theory goes hand in hand with
the politico-economic Schumpeterian growth theory that emphasizes innovation as a gale
of creative destruction stimulating technological change which is triggered by the
innovation of large corporations in search for market advantages. (Heimonen, 2013)
Last but not the least, this theoretical review identifies the
contextual/environmental factors approach to small firm growth. This aspect of small
firm growth is undoubtedly one of the most extensive and comprehensive approaches to
the phenomena that deals largely with external factors outside the firms locus of control.
According to Balboni et al., (2014) it is one of the main schools of thought that has
contributed to the understanding of small firm growth. As it is an extensive approach, it
encompasses a substantial range of factors and variables that can be attributed to the
growth of the firm. Given the large range of possible factors the approach can be further
divided into three views.
The first view focuses on the industry structure and market dynamics of the firm.
It suggests that the actions, behavior and growth of the firm are driven by the
opportunities and threats that came from the local market and influenced to be favored or
constrained by the structural characteristics of the industry where the firm belongs. The
second view looks at the institutional factors such as rules, norms, laws and policies
which can promote or inhibit growth. While on the other hand, the third view looks at the
immediate location and environment of the firm such as the location where the firm
operates and the hostility of the area.
This study also examines the integrative model of small business growth done by
Wiklund et al., (2009) and bases the conceptual framework and most of its variables on
the model. The model looks at small business growth using the different prevailing
perspectives on the phenomena today which is further classified into 5 major ones. These
perspectives are EO, Environment, Strategic Fit, Resource and attitude.
The first perspective is the EO perspective (Entrepreneurial Orientation). This
perspectives deals largely with the link between entrepreneurial activities of the business
and its growth. Variables like innovation and risk-taking behavior of the firm play major
roles in this perspective such that these are closely related to each other through
entrepreneurial process. The second perspective is the Environment perspective which
focuses on the link between the environment of the firm and its growth. In this
perspective, the environment is seen as something that provides small firms the chance to
exploit opportunities for growth.
The third perspective is the strategic fit perspective which is concerned with how
the characteristics and strategies of the firm fit with its environment. It suggests that the
effectivity of any strategy depends on the environment which the firm is in. The fourth
perspective is the resource perspective which concentrates on the link between the
resources that is available to the firm and its growth. This perspective is further divided
into three theoretical constructs; RBV, (resource based view) human capital of
entrepreneurs and network resources. Last of the perspectives is growth attitude. This
perspective analyzes the relationship between the entrepreneurs attitudes and
motivations to small firm growth. It argues that the attitudes and motivations of the
entrepreneurs or business owners is what provides the limits to the growth a business will
achieve.
Lastly, this study looks at similar literature done by Gartner, (1985) which is
about the phenomena of new venture creation. The framework that Gartner developed
emphasized the differences among entrepreneurs and their businesses and that the
diversity may even be larger than the differences between entrepreneurs and non-
entrepreneurs. Consequently it suggests that there is a need to classify entrepreneurs and
their ventures to describe the phenomena of venture creation. He further showed that
venture creation is a complex and multidimensional phenomena by integrating four
perspectives of entrepreneurship; (1) characteristics of the individual who started the
venture, (2) the organization which was created, (3) the environment surrounding the new
venture, and (4) the process by which the new venture is started.
The previous theories and views discussed in this theoretical framework are all
part of the main schools of thought that explain the phenomena of small firm growth.
Though they may be able to interrelate with each other, these different theories and views
still approach small firm growth in very different ways.

Figure 1. Framework of the study on small firm growth (Heimonen, 2013)

Figure 2. Diagram of revised model for business growth (Wiklund et al, 2007)
Figure 3. Framework of new venture creation (Gartner, 1985)
Conceptual Framework
The main purpose of this framework is to identify the variables involved in the
study. Independent and dependent variables will be described as well as the relationships
they have with each other. The measurement on small firm growth will also be discussed
in this segment.
The conceptual framework of this study is an adaptation and a mix of the
frameworks of Wiklund et al. (2009), Gartner (1985) and Baylosis (2016). Their models
on small firm growth although similar, use a wide range of factors and variables that
interrelate and affect one another. The three literature are very similar to one another in
the sense that they are integrated and thus substantially influence this current paper.
The theoretical constructs of the study are also based on the literature that were
cited and reviewed in chapter two. Though this study uses a large base of low level
variables, they all can be attributed into the five theoretical constructs that were discussed
earlier in this study. The constructs are entrepreneurial orientation, environment,
resources, organizational dimension, and attitude.
Under the EO construct, three variables were considered from various studies.
Each measure a different aspect of the construct and provides a well-rounded calculation
for it. The three variables are innovation, risk tolerance and proactiveness. Innovation
was taken from the study of Heimonen and Balbouni et al., risk tolerance was taken from
the studies of Wiklund et al (2009) and Baylosis (2016) and proactiveness was taken from
Miller (1987).
For the organizational construct, only one dimension was used. Firm attributes
was taken from Gartners study. Firm attributes is further dissected into age, size, form of
ownership, manner of establishment and initial capitalization of the firm. (Baylosis, 2016;
Gartner 1985; Philip, 2010; Garnacyzk, 2015)
The next construct is environment. In this main variable, only four dimensions
were used. Hostility, dynamism and heterogeneity were all taken from (Wiklund et al.,
2009) study while location (based on the income classification of the cities and
municipalities where the business operates) was taken from Baylosis (2016) study.
Resources is also used as a main construct in the study. Although only three
indicators were used to measure this construct, all reflect a different and unique aspect of
resources. The first aspect pertains to the immediate resources of the firm. This aspect
identifies variables such as the number of full time employees of the firm, its access to
financial capital and the equipment needed for the firm to operate. (Automotive repair)
The owners human capital is the second aspect for resources. It is identified by the
knowledge, experiences, trainings and education attained by the owner. The last aspect
used for resources would be network resources or the firms social capital. Identifiers for
this indicator would be the number of partners, the firms affiliations and its professional
advisors. All the aspects were also taken from Wiklund et al (2009) study.
The last construct of this studys model for small firm growth looks at the attitude
of the owner or entrepreneur. In this construct motivation, personal goals and importance
of growth relative to the owner is used as the two basic dimensions. Motivation was taken
from Baylosis (2016) and importance of growth was taken from Miller (1983).
Small firm growth is measured by two dimensions in this study. The first is by the
change in employment size and the second is change in total assets. Change in
employments size was also used by Wiklund et al (2009) in his study on small firm
growth. On the other hand change in total assets was used by Allen (1970) in her study on
growth and profitability.

EO
Innovation
Innovation
Risk tolerance
Risk tolerance
Proactiveness
Proactiveness
Environment
Atittude Hostility
Hostility
Dynamism
Dynamism
Motivation
Motivation Heterogeneity
Heterogeneity
Growth Importance
Growth Importance Income
Income Classification of
Classification of the
the City
City
Goals
Goals or Municipality of
or Municipality of Location
Location
Small Firm
Growth
Change in total assets
Organizational
Dimenson
Resorces Years
Years of Operation
of Operation
Immediate
Immediate resources
resources Initial Capitalization
Initial Capitalization
Human Capital
Human Capital of
of Entrepreneur
Entrepreneur Manner of
Manner of Establishment
Establishment
Network Resources
Network Resources
Figure 4. Small Firm Growth Model of the study

CHAPTER IV
METHODOLOGY
Research Design
The purpose of this study is to identify and determine the drivers of growth of the
top micro and small automotive retail enterprises in Cavite. Thus the research design of
this study is based on three main initiatives. The first initiative is to determine the
characteristics and attributes of micro and small enterprises in this study that drive their
growth. The second initiative is to identify the characteristics and attributes of the
entrepreneur that drive the growth of these enterprises and the last initiative is to assess
the external and internal factors that can drive the growth of these enterprises.
Although the the study has more than one initiative, the initiatives presented are
similar to the extent of their focus on the dependent variable. These initiatives seek to
describe and ascertain the positive and negative relationship of the different theoretical
constructs in this study with the independent variable which is the firm level growth in
assets and labor. Thus, it required a research design that is quantitative in nature.
Quantitative methods were employed to emphasize the objective initiatives of the study.
As such, statistical, mathematical and numerical analysis was used for the data that was
be obtained through surveys and questionnaires.

Following the quantitative design the study used, correlational research design
was also used in the study. This helped ascertain the relationship of the different
independent variables derived form the five theoretical constructs introduced in this study
and the dependent variable. Finally, explanatory and desciptive research design was also
employed in the study. The analysis for the drivers of growth using the different
theoretical constructs explain and describe how the variables of those constructs affect
the growth in assets and employment of the enterprises in this study.
Time and Place of the Study
The study was conducted from the period of September 2016 to November 2016.
It is in that period that the data was collected and data analysis conducted. The data that
was collected is historical and current for better accuracy for the model developed in this
study. Morever, the study collected historical data on the past three to five years of
business activity of the targeted sample of enterprises that provided for ample and sound
analysis.
As for the location of the study, the area coverage encompassed majority of the
province of Cavite. For the purposes of the study, Cavite was chosen as the place of the
research due to its close proximity to the researchers base of operations and its close
proximity to the countrys capital. The province is part of region 4A (CALABARZON)
which consists of Cavite, Laguna, Batangas, Rizal and Quezon. Cavite having a land area
of 128, 755 hectares and a population of 2,856,765 is bordered to the north by Manila
Bay and the city of manila. It is directly across the bay from the province of Balayan and
to the east, you will find the province of Rizal and Laguna. To the south of Cavite,
Batangas with the west border being the South China Sea.
Cavite is composed of several cities and municipalities. According RA 9727
ratified in 2009, the cities and municipalities in Cavite are further grouped into several
legislative districts. The first district is composed of Cavite City, Kawit, Noveleta and
Rosario. The second, third and fourth districts are only composed of one city or
municipality each; Bacoor, Imus and Dasmarinas respectively. The fifth legislative
district is composed of Carmona, GMA and Silang. The sixth legislative district is
composed of Trece Martirez City, General Trias, Tanza and Amadeo. Lastly, the seventh
district is composed of Tagaytay City, Alfonso, General Emilio Aginaldo, Indang,
Magallanes, Maragondon, Mendez, Naic and Ternate. All cites and municipalities within
those districts will be covered and used in this study.
Moreover Region 4A which the province is part of, was found to have a large
concentration of business establishments second only to the National Capital Region
(NCR). As the study is concerned with automotive establishments, particularly in parts
sales and repair, region 4A serves as a good vantage point since it is also known for
having the most automotive assemblers in the country. (DTI) Figure 1 shows the map of
Cavite.
Figure 5. Map of Cavite (wikimedia.org)

Sources of Data
This study heavily relied on primary data that came from the studys respondents.
Therefore the data that was gathered came from the business owners and entrepreneurs
themselves. Secondary data and from various government agencies like that of DTI
provided only provided the population size and location of most of the businesses located
therein.
Data gathered was taken from all the seven districts of Cavite. Majority of which
came from the business owners themselves but in the cases when they were not available
managers or employees that were capable of answering the questionnaire and interview
schedule accurately and unbiased sufficed.
Sampling Procedures
Given the nature of this study, as it is correlational in design and that most of its
variables are qualitative, it was appropriate to use personal interview and survey as the
main method for collecting the primary data needed. Although it was a very costly and
time consuming method for data collection, it served to lessen inaccuracy among the
variables and allowed for an in-depth look on the individual characteristics of each
business or enterprise in the sample area. It also allowed the conductor of the interview
and survey to help the respondents answer the instruments adequately and correctly.
Consequently, since the method is indeed time consuming and costly,
administering the survey and questionnaire to the whole population would not only be
unnecessary but also prove to be inaccurate. A sampling technique must be employed not
only for the purpose of saving time and money but also for the purpose of obtaining more
accurate data and ultimately more accurate results. [ CITATION Ald12 \l 1033 ]
The study then used a combination of sampling techniques to gather the data
needed. Due to the specific target sample intended for the research, a mix of non-
probability, convenience and purposive sampling was employed since the enterprises of
concern in this study are already quite specific in nature. Moreover, the target population
of the study consisted of all micro and small enterprises dealing in the retail of
automotive parts. The studys sample size however, consisted of enterprises with the
largest asset capitalization in their classifications as micro and small enterprises.
The population frame is 200 micro and small enetrprises that fall into automotive
parts retail. This was taken from the DTI database of DTI Cavite. But due to time and
budget constraints, the study only gathered a sample of the top 100 eneterprises with the
highest asset size. Half of the population is a good representative sample that contains
most if not all the characteristics of the population and minimizes the errors associated
with sampling.
Methods of Data Collection
The data was collected by means of a mix of primary data collection methods.
The study used personal interview or face to face interview with the respondent
entrepreneurs and owners as well as questionnaires and telephone interviews to save time
and effort. Mailed and emailed questionnaires was not used for primary data collection in
this study due to its nature of being unreliable and often times have a slow response rate
if any. The personal interview of the entrepreneurs and business owners was conducted
from September 2016 to November 2016. This allowed ample time to gather the needed
data from the wide and large expanse of the province of Cavite.
The face to face or personal interview method of data collection allowed for
greater accuracy of data because of its engaging nature as a data collection method. The
only setback was its time consuming and quite difficult administration. The
questionnaires was given by the researcher on the spot and helped the respondents answer
properly the survey questionnaire without affecting the data. This method allowed for a
faster collection of data though it was needed that the study take good measure in the
administration of these survey questionnaires to avoid the risk of unreliable data.
Lastly, telephone interview was also used to collect primary data in this study. In
the event that the entrepreneur or business owner was needed to answer the questionnaire
or interview schedule and is not available, telephone interview was the most viable option
to collect primary data. It is less costly and a more efficient method to collect primary
data in some circumstances though the method was used on a case to case basis
nonetheless.
All of the three methods that was used was backed up by a formal letter from the
institution of this study and served as the permit to the correspondence and other sources
of secondary data.
Data Analysis
For the analysis of the data, the study used statistical programs such as Eviews,
Stata and SPSS in formulating a regression model that will reflect the relationship of the
different factors that drive growth in assets and growth in employment. Furthermore the
regression models developed in the study will also show and establish the relationship
each theoretical construct has with the dependent variables.
Aside from using Ordinary Least Squares (OLS) and general linear analysis, the
study also employed the use of multiple regression analysis to allow for all the objectives
of the study to be met. The simple regression analysis like that of the OLS is a method
for estimating the unknown parameters in a linear regression model, with the goal of
minimizing the differences between the observed responses in some arbitrary dataset and
the responses predicted by the linear approximation of the data. Although OLS and linear
regressions are considered to be the most simple of analysis, it is the most appropriate
due to the time series data and descriptive nature of the study.
Multiple regression or multivariate regression analysis is used to ascertain a
relationship between several independent or predictor variables and a dependent or
criterion variable. By employing this regression, it allowed for the determination of what
variables affects growth in assets and employment the greatest and what variables affect
it the least. In the study, the independent variables are taken from the five theoretical
constructs discussed earlier in this study; entrepreneurial orientation, organizational
dimension, environment, resources and attitude.

Since part of the study is highly descriptive in design, some descriptive statistics
were employed. These include frequency, percentage, mean, minimum value, and
maximum value. All those are needed to effectively describe the factors or variables in
the study. It also includes the description of the socioeconomic profile of the
entrepreneurs wherein they will be described in terms of age, gender, civil status, family
size, educational attainment, attitudes and motivations.
Their corresponding businesses were describe as well. Number of employees,
initial capitalization, assets and the businesss age are only some of the descriptive
variables that were asked about the micro and small enterprises. To determine growth
however, assessment of the firms assets size over the past three to five years of their
business activity was conducted.
The coefficient of determination (R2), p-values, F-statistic of different regression
tests determined the significance of the overall regression model.
The researchs main regression model for growth is:
GA = 0 + 1 INV+ 2RT+ 3 PV + 4 YO + 5IC + 6MOE + 7HT + 8DM + 9INC + 10IFE +
11CFE + 12BSS + 13AFC + 14NR1 + 15NR2 + 16NR3 + 17CG + 18EBM + 19EWM +
20PEB + 21TMB + 22MV + 23GI + 24GL +
Where: GA = Change in asset size
IN = Innovation
RT = risk tolerance
PV = proactiveness
YO = years of operations
IC = initial capitalization
ME = manner of establishment
HT = heterogeneity
DM = dynamism
IN = income classification of city/municipality
IE = initial number of full-time employees
CE = current number of full-time employees
SS = source of supply
AF = access to financial capital
N1 = partner businesses/companies
N2 = business affiliations/organizations
N3 = professional advisors
CG = college graduate
BM = education in business or management

EM = experience working as a manager
EB = experience starting or running a business
TB = training in management or business
MV = motivation
GI = growth importance
GL = growth goals
= error term
0 = intercept
1 24 = regression coefficients
CHAPTER V
RESULTS AND DISCUSSION
The chapter will present the results and statistics of the data taken from the
sample of 106 micro and small enterprises in Cavite. It will be followed by detailed
discussions immediately after the presentation of the results. The chapter will then
present the regression models of the study, followed by other statistical tests and end with
individual discussions for each theoretical construct.
Profile of the Enterprises
The demographics of businesses constantly change over the years. In this segment
of the study, some sociodemographic of top micro and small automotive parts retail
enterprises during the time of this study are shown and presented. This would help in the
attempt to give a clear profile and description of the enterprises examined in this
research. It starts with the description of the gender of the entrepreneurs, followed by
their roles in the company, their age, civil status, number of dependents, and lastly the
location of the enterprises.
In terms of gender of the entrepreneurs, results show that majority of the
enterprises were owned or managed by males. 60.4% of all the enterprises were owned or
managed by males and 39.6% were owned and operated by females. In a more detailed
description, out of the total 106 automotive parts retail enterprises surveyed or
interviewed, 64 were owned or managed by male enterprises and 42 were owned or

managed by female entrepreneurs. This result coincides with the fact that the automotive
industry where these businesess belong to is is male-dominated. Despite this, it was
unexpected that the results show that the female entrepreneurs in this almost consisted
half of the sample size. This could be attributed to the increasing opportunities for women
to engage in business over the past years (Edralin, 2011) and womens participation to the
economy inclined toward micro and small enterprises. (Lazo, 2015) Table one shows the
frequency distribution for gender.
On the other hand, in terms of the role of the entrepreneur in the firm, majority of
the entrepreneurs surveyed or interviewed are owners. 63.2% of the sample size of
entrepreneurs are owners and only 36.8% are managers. Out of the 106 entrepreneurs in
the saple size 67 are owners and 39 are managers that give a total of 106 all in all. This
result is not surprising since micro, small and even medium sized enterprises tend to be
operated by the owners themselves. Table two shows the frequency distribution for the
role of the entrepreneur.
The ages of the entrepreneurs in this study are quite far apart. The lowest age in
the sample size is 21 and the highest age is 84 resulting in a very large range of 63. With
this, the standard deviation showed a value of 13.33 which is quite adequate considering
the large range of the sample in terms of age. The average age of the entrepreneurs in the
study is 41 and shows that majority of the entrepreneurs are middle aged and only a few
are young and elderly. To give more detail, 24.5% of the entrepreneurs are aged 21 to 29,
27.4% are aged 30 to 39, 20.8 are aged 40 49, 17% are aged 50 to 59 and lastly only
10.4% are aged 60 and above. Table three shows the frequency distribution for age.
The entrepreneurs civil status is also included in the profile of the enterprises in
this study. Results show that majority of the entrepreneurs are married which is expected
due to the sample size having a mean age of 41. Out of the 106 entrepreneurs surveyed,
62.3% or 66 are married and 37.7% or 40 are single. Although majority of the
entrepreneurs are married, the percentage of the entrepreneurs that are single is still quite
large. This could be due to the business activities when running a business. One of the
entrepreneurs stated during one the interviews that marriage is not an option because of
the hectic schedule that enterprise entails. See table four for the frequency distribution for
civil status.
The entrepreneurs number of dependents is also included in the profile of the
enterprises in this study. This factor in the profile plays a big role in the life of the
enterprise due to its effect on the entrepreneur be it in financialy or psychologicaly.
Results show that on average, the entrepreneurs in this study have two dependents with a
mean of 1.79. The highest recorded number of dependents is six and the lowest is zero
dependents. With a sample size of 106, 22.6% have no dependents, 47.2% have one to
two dependents and 30.2% have three or more dependents. This shows that majority of
the entrepreneurs of these top micro and small automotive parts retail enterprises have
one or two dependents. This could be due to the resources that the enterprise provides.
With the resources that these entrepreneurs receive from the business, they are able to
afford the expenses that dependents entai. See table five for a detailed frequeny table.
Lastly, the profile includes the location of the enterprises. There are 7 locations
where the study obtained its sample and these locations represent their respective
districts. The locations are as follows; Dasmarinas, Imus, Bacoor, Kawit, Carmona, Trece
Martires and Tagaytay. Out of the 106 enterprises surveyed or interviewed, majority are
from Dasmarinas with a frequency of 27, followed by Bacoor with 18, Carmona with 17,
Imus with 15, Trece Martires with 11 and lastly Tagaytay and Kawit both with only 9
enterprises surveyed. See table six for a detailed frequeny table.

Table 1
Gender Frequency
Gender Frequency Percentage
Male 64 60.4%
Female 42 39.6%
Total 106 100%
Table 2
Role of Entrepreneur Frequency
Role Frequency Percentage
Owner 67 63.2%
Manager 39 36.8%
Total 106 100%

Table 3
Age Frequency
Age Class Frequency Percentage
21 - 29 26 24.5%
30 - 39 29 27.4%
40 49 22 20.8%
50 59 18 17.0%
60 & above 11 10.4%

Total 106 100%
Mean Age 40.97
Standard Deviation 13.33
Table 4
Number of Dependents Frequency
Number of
Frequency Percentage
Dependents Class
0 24 22.6%
1-2 50 47.2%
3 & above 32 30.2%
Total 106 100%

Mean Number of
1.79
Dependents
Table 5
Civil Status Frequency
Number of
Dependents Class
Single 40 37.7%
Married 66 62.3%
Total 106 `100%

Table 6
Location Frequency
City/Municipality Frequency Percentage
Dasmarinas 27 25.5%
Bacoor 18 17.0%
Imus 15 14.2%
Tagaytay 9 8.5%
Kawit 9 8.5%
Trece Martires 11 10.4%
Carmona 17 16.0%
Total 106 `100%

Attributes of the Enterprises
The attributes of the enterprise contains almost half of the independent variables
in this study. They are the factors or features inherent in the enterprise that play a major
role in two of the theoretical constructs discussed in this paper. In this segment of the
results and discussion, the attributes of the enterprises are presented and described. It
starts with a brief discussion of the variables of the organizational dimension construct
followed by the variables of the resource theoretical construct.
For the first attribute, the research examines the years of operations of the
enterprises. Results show that the range is 22 years from the youngest with three years of
operations and the oldest with 25 years of operations. Although majority of the
enterprises in the study have five years of operations, it was found that the mean years of
operations is eight years. Furthermore it was found that with a range of 22 years, the
standard deviation is 3.957. Since the enterprises in this study are those with one of the
largest asset sizes in the population it is not surprising to see that most of their years of
operations range from six to eight years. This coincides with studies that correlate a
relationship with age and asset size. (Bhattacharya, 2015) See table seven for a detailed
frequency table.
Another attribute of the enterprise that this study examines is the initial
capitalization of the enterprise at the start of the business. This is a very important
attribute that often affects the growth of the business even after the start up stage. (Raz &
Gloor, 2007) For the enterprises in this study, the average initial capitalization is about
1,036,000 with a minimum value of 30,000 and a maximum of 5,000,000. The standard
deviation gives a value of about 961,425.808. Furthermore out of the 106 enterprises,
only 30 have an initial capitalization under 500,000 and the rest have an initial
capitalization of 500,000 and above. Lastly, 25 enterprises have an initial capitalization
above 1,000,000. See table eight for a more detailed frequency table.
For the next attribute, the manner of establishment of the enterprise is also
described. This variable represents how an enterprise was formed by the entrepreneur and
often sets the direction of the enterprise in terms of its growth. The enterprise can either
be established as set up, purchased or inherited. The results show that majority of the
enterprises were set up. Out of the 106 enterprises, 51 were set up, 29 were inherited and
26 were purchased. Here it is apparent that micro and small enterprises tend to be set up.
Almost half of the sample size is set up and only 27 and 24 percent are inherited and
purchased respectively. See table nine for a detailed frequency table.
Employees are an important resource for any enterprise and is often part of the
recent small firm growth models. (Islam et al., 2011; The Process of Firm Growth,
2015) The study now describes the first variable of the resource construct which is the
number of full time employees; initial and current. For the number of initial full time
employees, the average is two employees while for the current number of full time
employees the average is four employees. Furthermore results show that the Standard
deviation is 1.68 and 3.59 for initial and current number of full time employees
respectively. Here it seen that there has been almost a 100% growth in employees over
the past five years. The average and standard deviation of both variables doubled over
the past five years of the enterprises operations. Moreover it can be inferred through the
statistics that the concentration of number of full time employees ranges from two to
three employees for both the current and initial which is an expected result due to the
micro and small size of the enterprises.
Out of the 106 enterprises, 14 had an initial number of only one full time
employee, 59 had two full time employees and 33 enterprises had a number of three or
more initial full time employees. For the current number of full time employees, 42
enterprises have one to two full time employees, 45 have three to four full time
employees and 19 have five or more full time employees. Since most of the entrepreneurs
are married, it is not surprising to see a concentration around two full time employees
because it is usually the husband and wife that are the self-employees of the business.
Refer to table 10 for the initial and table 11 for the current full time employees
frequency.
The study now looks at and describes the enterprises source of supply. Since the
research is focused on automotive parts retail businesses, an important resource factor is
the source of the products they sell. In the particular retail industry that the enterprises are
in, the source of supply for automotive parts can either be local or imported from abroad.
This resource variable reflects the two kinds of products these automotive parts retail
firms sell and may be a significant factor of the enterprises growth. Out of the 106
enterprises, majority only have a local source of supply for their automotive parts.
Further results show that 61 have only a local source of supply while 23 enterprises
showed to have both a local and imported source of supply for their products. Lastly, only
22 showed to have only an imported source of supply. It can be inferred with the statistics
that majority of the enterprises could be facing a homogeneous customer market as they
face strong demand for only local automotive parts. This could be due to the cheaper and
more affordable prices of local automotive parts. When the respondents were asked about
this, they stated that their market does not care much for quality parts as most of the
enterprises customers are Jeepney drivers. Table 12 presents the frequency for the
enterprises source of supply.
The enterprises access to financial capital has long been a part of the growth
theories and models for small business growth especially in the resources based theories.
This study now describes the access of the top automotive parts retail enterprises access
to financial capital. Out of the total enterprises surveyed, 38 exhibited average ease of
acces to financial capital and 21 and eight exhibited low and very low ease of acces to
financial capital respectively. Meanwhile 31 and eight enterprises exhibited high and very
high ease of acess to financial capital. Results show that on average, the enterprises
exhibited only an average ease of acces to financial capital despite them being the
enterprises with the largest asset sizes in their market. This result echoes a number of
studies done on SMEs in the country which state that these enterprises lack the
opportunities and benefits of easy access to credit and business loans. Which is
consequently one of the causes as to the hollow SME sector and its low contribution to
the GDP of the country. (SEPO, 2012) Refer to table 13 for the ease of access frequency.
Now the human capital resource will be described and discussed. In this study, the
entrepreneurs human capital is measured by five elements; college graduate, education
in business or management, prior experience starting or running a business and lastly,

training or seminars in management or business. Results show that majority of the
entrepreneurs in the study are college graduates. Although this is the case, almost half of
the entrepreneurs were undergraduates. For education in business or management,
majority of the entrepreneurs have none though it might be important to note that almost
half also exhibited the latter. For experience working as a manager, majority of the
enterprises have experience but also almost half have none. For prior experience starting
or running a business before, majority had none and only 20% have experience. Lastly
for the trainings or seminars in management or business, half of the entrepreneurs stated
that they have underwent training or seminars in business or management and half stated
that they have not. Concurring with those results, the overall average human capital of the
entrepreneurs reflected was low. While majority of them are college graduates and have
experience as managers, majority of the sample size have no education in business or
management and no prior experience starting a business before. To add, during the survey
and interviews the study was able to infer that some entrepreneurs perceived pursuing
higher education as unnecessary in running a business. Refer to tables 14 - 19 for the
human capital frequency.
The last attribute to be described is the network resources variable of the
resources construct. For this study, it measures network resources by three elements. The
first element is the number of partner companies or partner businesses the enterprise has.
The second element is whether or not the enterprise is affiliated with any business
organizations and the third element is whether or not the enterprise has formal
professional advisors.
Here results show that majority of the enterprises in this study do not have any
partner companies or businesses. Out of the 106 enterprises surveyed, 70 enterprises have
no business or company partners while 21 enterprises have only 1 business or company
partner. Furthermore only 15 enterprises have 2 or more business or company partners.
For the second element, results show that majority of the enterprises in this study are not
a part of or affiliated with any business organizations. Out of the 106 enterprises
surveyed, 73 have no affiliations and only 33 are affiliated with business organizations.
For the third and last element of network resources, results show that majority of the
enterprises have no formal professional advisors. Out of the 106 enterprises, 67 have no
formal professional advisors and only 37 enterprises have and consult with formal
professional advisors. These results reflect that majority of the entrepreneurs in this study
have low network resources. This also shows just how lacking these enterprises are in this
resource. This may suggest that most entrepreneurs in this study prefer to stand alone and
independent of other businesses and have yet to realize the benefits of a business network
and connections. Refer to tables 20 - 22 for a detailed network resource frequency.
Table 7
Years of Operations Frequency
Age Class Frequency Percentage
3-5 36 34.0%
6-8 42 39.6%
9 - 11 14 13.2%
12 - above 14 13.2%
Total 106 100%

Mean Age 7.78
Standard Deviation 3.95
Table 8
Initial Capitalization Frequency
Class
Below 500,000 30 28.3%
500,000 - 750,000 21 19.8%
750,001 - 1,000,000 30 28.3%
Above 1,000,000 25 23.6%
Total 106 100%

Mean Age 1,036,528.30
Standard Deviation 961,425.808
Table 9
Manner of Establishment Frequency
Manner of
Establishment
Inherited 29 27.4%
Purchased 26 24.5%
Set up 51 48.1%
Total 106 100%
Table 10
Initial Number of Full Time Employees Frequency
Initial Number of Full

Time Employees
1.00 14 13.2%
2.00 59 55.7%
3.00 18 17.0%
4 & above 15 14.2%
Total 106 100%
Table 11
Current Number of Full Time Employees
Current Number of
Full Time Employees
1-2 42 39.6%
3.00 25 23.6%
4.00 20 18.9%
5 & above 19 17.9%
Total 106 100%
Table 12
Business Source of Supply Frequency
Business Source of
Supply
Local 61 57.5%
Imported 22 20.8%
Both 23 21.7%
Total 106 100%
Table 13
Ease of Access to Financial Capital Frequency
Ease of Access to
Financial Capital
Very Low 8 7.5%
Low 21 19.8%
Average 38 35.8%
High 31 29.2%
Very High 8 7.5%
Total 106 100%
Table 14
Human Capital 1 Frequency
College Graduate Frequency Percentage
Yes 59 55.7%
No 47 44.3%
Total 106 100%

Table 15
Education in Business
Management
Yes 48 45.3%
No 58 54.7%
Total 106 100%
Table 16
Experience Working as a
Manager
Yes 63 59.4%
No 43 40.6%
Total 106 100%

Table 17
Prior Experience Starting

or Running a Business
Yes 22 20.8%
No 84 79.2%
Total 106 100%
Table 18
Training or Seminars in
Management or Business
Yes 49 46.2%
No 57 53.8%
Total 106 100%

Table 19
Overall Human Capital Frequency

Human Capital Frequency Percentage
very low 31 29.2%
low 25 23.6%
average 35 33%
high 12 11.3%
very high 3 2.8%
Total 106 100%
Table 20
Network Resources 1 Frequency
Number of Partner
Companies/Enterprises
None 70 66%
1.00 21 19.8%
2.00 & above 15 14.2%
Total 106 100%

Table 21
Business
Organizations/Affiliations
Yes 33 68.9%
No 73 31.1%
Total 106 100%

Table 22
Formal Professional
Advisors
Yes 37 34.9%
No 67 63.2%
Total 106 100%

Environmental Factors of the Enterprises
For the following pages of this research, external and internal environmental
factors of the enterprises are presented and described. According to some business
dictionaries, the internal environment of the enterprise is defined as those factors within
the organization that influence or impact the approach and activities of its operations.
(BusinessDictionary, 2016) Inversely, the external environment of the enterprise is
defined as the factors that are outside the enterprise and its control. (Kokemuler, 2016)
Therefore the attitude, entrepreneurial orientation and environment construct, which were
discussed earlier in this study form the environments of these micro and small
enterprises.
Now the study describes the first variable of the attitude theoretical construct for
the enterprises surveyed. The motivation of the enterprises to pursue going into business
suggests a number of inferences into the attitude of the entrepreneur towards his
enterprise and ultimately toward its growth. (Wiklund et al., 2009) Three elements were
used in getting a measurement for the entrepreneurs motivation. These are; opportunity,
necessity and work schedule flexibility. Going to the results, it showed that the average
motivation for these enterprises was high. Out of the 106 eneterprises 57 enterprises
showed to have a measure of average motivation, 35 enterprises have a measure of high
motivation, 12 enterprises have a measure of very high motivation and only 2 enterprises
showed to have low motivation. With the high motivation these enterprises have, it is
possible that their large asset size is also caused by this result. See table 23 for a detailed
frequency table.
Growth importance which is a variable of the attitude construct is a part of the
attributes that will be described in the paper. Here descriptive statistics for the growth
importance attitude is shown for the enterprises in the study. Results show that the overall
average measure for growth importance of all the enterprises surveyed is high. This is
natural due to the nature of the enterprises being those with the largest asset size in
Cavite. Out of the 106 enterprises, 44 enterprises have a measure of average growth
importance, 31 have a measure of high growth importance, 26 have a measure of very
high growth importance and only 5 have a measure of low growth importance. See table
24 for a detailed frequency table.
The goals of the entrepreneur is also showed and described here. It is the last
variable for the attitude theoretical construct and is measured by nine elements. Results
show that the overall average measure for the goals of the entrepreneur is also high. Since
the enterprises in this study are those with the highest asset size, this result is sound.
Furthermore, This coincides with Baum & Locke's, (2004) study that state that goals have
direct effects on the firms growth. Out of the 106 enterprises, 56 have a high
measurement of goals, 37 have an average measurement of goals, and only 13 have a
very high measurement of goals. See table 25 for a detailed frequency table.
Now the study looks at the entrepreneurial orientation construct as an internal
environment actor of the enterprise. The innovation, risk tolerance and proactiveness of
the enterprises will all be described and presented. For the innovation of the enterprises,
statistics show that on average, the enterprises in this study exhibit only average
innovation. During the interviews and surveys, most entrepreneurs stated that products in
the automotive retail business usually take some time to get outdated and replaced with
newer models or versions. Since they do not manufacture or make the products they sell
themselves, they often stick to what their suppliers offer them. Out of the 106 enterprises,
49 enterprises have a measure of average innovation, 27 have a measure of low
innovation, 13 have a measure of high innovation, 9 have a measure of very high
innovation and lastly 8 have a measure of very low innovation. See table 26 for a detailed
frequency table.
For the risk tolerance environmental factor, this variable represents the propensity
the enterprise has to taking risks. These risks include granting credit to customers and
taking advantage of opportunities. The results show that the overall, the enterprises in this
study exhibit a low measurement of risk. Out of the 106 enterprises, 51 enterprises have a
low measurement for risk tolerance, 32 have a very low measurement, 14 have an
average measurement, 6 have very high measurement and only 3 have very high
measurement. Here it seen that majority of the enterprises do not have the tendency to
exhibit high tolerances for risk. It can be inferred that due to their relatively smaller
capitalization compared to medium and large enterprises, they cannot afford to take
higher risks that would allow them more opportunities for growth. Certain risks like
being able to sell on credit and borrowing money for business operations and ventures are
not usually taken by these enterprises because they lack the liquidity of working capital
and access to finance that is needed for it. (Van Horne & Wachowicz, 2004) See table 27
for a detailed frequency table.
The last internal environmental factor that will be described for the enterprises in
this study is the proactiveness of the enterprise. This variable reflects the willingness or
eagerness of the enterprise to improve and to stay ahead of the competition. Results
present that on average, the enterprises in this study exhibit high proactiveness. Since
majority of these micro and small enterprises are managed and operated by the owners
themselves, proactiveness towards the betterment of their businesses may be a significant
factor to their success with their large asset sizes. (Philip, 2010) Out of 106 enterprises,
47 and 17 exhibitted high and very high proactiveness respectively, while 39 exhibitted
average proactiveness and only 3 exhibitted low proactiveness. See table 28 for a detailed
frequency table.
For the external environment variables, the study describes the four variables of
the environmental theoretical construct. These variables are hostility, dynamism,
hetergogeneity and lastly the income classification of the city or municipality that the
enterprise is located in. Together these variables form the external environment of the
enterprise.
For the hostility variable, the study finds that on average, the enterprises exhibit
high hostile environments. Results indicated that out of the 106 enterprises, 77 enterprises
face high and very high hostile environements and only 29 enterprises face average and
low hostile environments. Given the diversity and number of their competition, these
enterprises are faced with a very hostile environement. Their competition not only comes
from the other small scale automotive parts retailers but also those large foreign
companies that often provide higher and better quality automotive parts. See table 29 for
the frequency on hostility.
The second external variable is the dynamism of the enterprises environment.
This measures how much the business environment changes. Examining the results, the
study finds that on average the enterprises face low dynamic environments. Out of the
total sample size, 71 enterprises face low and very low dynamic environemnts while the
rest face only average or moderate dynamic environements. No enterprise in the study
faces high dynamic environements. The results reflect that the environment these
enterprises operate in is quite stable. Though the enterprise faces a strong number of
competitors, it has no difficulty predicting the competition actions and activities.
Furthermore, the enterprises find it easy to predict the demand and preferences of
customers. See table 30 for the dynamism frequency table.
The third external variable is the heterogeneity. The environmental heterogeneity
of the enterprise reflects the complexity of the environment which it is in. Here the study
finds that on average the enterprises face an average heterogeneous environement. Out of
the 106 enterprises of the study, 49 enterprises exhibited average heterogeneous
environements, while 36 enterprises exhibited low and very low heterogeneous
environments. On the other hand, only 21 enterprises exhibited high and very high
heterogeneous external environments. This result may reflect that the demand for the
different automotive parts these enterprises sell varies but only to an average extent. This
result also echoes the low dynamic environement these enterprises operate in. The
products these enterprises sell mostly fall under fast moving and small automotive parts,
therefore they only experience little heterogeneity in their environments. See table 31 for
the heterogeneity frequency.
For the last external environment variable, the study presents the results for the
income classification of the city or municipality where the enterprise operates. Since the
study only obtained one representative city or municipality per district, only five cities
and two municipalities where included in the sample location. Results show that out of
the five cities and 2 municipalities surveyed, 60 enterprises operate in 1st class cities, only
9 operate in 2nd class cities and 37 operate in 4th class cities and 1st class municipalities.
As seen in the result a huge portion of the sample size operates in 1st class cities. This
may reflect that the 1st class cities provide these firms with the environment they need to
survive. With the high income that these cities earns every year, it is not surprising to see
a concentration of micro and small enterprises operating therein. Refer to table 32 for the
income classification per city or municipality frequency.

Table 23
Motivation Frequency Table
Motivation Frequency Percentage
Low 2 1.9%
Average 57 53.8%
High 35 33.0%
Very High 12 11.3%
Total 106 100%
Table 24
Growth Importance Frequency
Growth Importance Frequency Percentage
Low 5 4.7%
Average 44 41.5%
High 31 29.2%
Very High 26 24.5%
Total 106 100%

Table 25
Goals Frequency
Goals Frequency Percentage

Average 37 34.9%
High 56 52.8%
Very High 13 12.3%
Total 106 100%
Table 26
Innovation Frequency Table
Innovation Frequency Percentage

Very Low 8 7.5%
Low 27 25.5%
Average 49 46.2%
High 13 12.3%
Very High 9 8.5%
Total 106 100%

Table 27
Risk Tolerance Frequency
Risk Tolerance Frequency Percentage

Very Low 32 30.2%
Low 51 48.1%
Average 14 13.2%
High 6 5.7%
Very High 3 2.8%
Total 106 100%
Table 28
Proactiveness Frequency
Proactiveness Frequency Percentage

Low 3 2.8%
Average 39 36.8%
High 47 44.3%
Very High 17 16.0%
Total 106 100%

Table 29
Hostility Frequency
Hostility Frequency Percentage
Low 14 13.2%
Average 15 14.2%
High 66 62.3%
Very High 11 10.4%
Total 106 100%
Table 30
Dynamism Frequency
Dynamism Frequency Percentage
Average 33 31.1%
Low 46 43.4%
Very Low 27 25.5%
Total 106 100%

Table 31
Heterogeneity Frequency
Heterogeneity Frequency Percentage
Very High 9 8.5%
High 12 11.3%
Average 49 46.2%
Low 27 25.5%
Very Low 9 8.5%
Total 106 100%
Table 32
City or Municipality Income Classification Frequency
Income Classification Frequency Percentage
1st Class City 60 56.6%
2nd Class City 9 8.5%
4th Class City 11 10.4%
1st Class Municipality 26 24.5%
Total 106 100%

Regression results
The full regression model of the study is shown in table 26. Out of the 29
variables included in the regression, only eight variables were found significant:
innovation (INV), risk tolerance (RT), proactiveness (PV), years of operation (YOO),
hostility (HT), number of initial full-time employees (IFE), ease of access to financial
capital (AFE) and lastly number of partner businesses/companies the enterprise has
(NR1). It is important however to state that the chosen level of significance for this study
is at the 10 percent level as prescribed by Gujarati (2004) for cross-sectional research.
The other 21 independent variables however, proved to be insignificant even at the 10
percent level. Initial capitalization (IC, manner of establishment (MOE1 & MOE2),
dynamism (DM), heterogeneity (HY), income classification of city or municipality (SCC,
FOC & FCM), current full-time employees (CFE), business source of supply (SS1 &
SS2), business affiliations/organizations (NR2), formal professional advisors, motivation
(MV), growth importance (GI), and goals (GL) were not significant.
Although most of the predictor variables of the study were found to be
insignificant, other statistical indicators proved to compensate for this. The goodness-of-
fit (R) of the regression gave an impressive value of .934 while its adjusted R gave a
value of .909. This is an excellent result that indicates that 90 percent of the growth in
assets of these micro and small enterprises engaged in the retail of automotive parts is
explained by the predictor variables. Based on the F-ratio and F-sig value of .000, the
model as a whole is significant. This indicates that the predictor variables jointly affect
and explain the outcome variable of growth in assets.

Innovation which was found significant, had a positive effect on asset growth. A
unit increase in innovation of these enterprises would increase asset growth by .079
percent. This result concurs with numerous other research that suggest that
entrepreneurial orientation which innovation is a part of, positively affects small firm
growth. (Aghion, Akcigit, & Howitt, 2015; Audretsch, 1995; Heimonen, 2013; Quimba &
Rosellon, 2012) As these firms face a large number of competitors and varied demand for
their products, they are forced to innovate and look for newer and better products to
merchandise which in turn helps them grow and expand. These firms are also pressed to
find different approaches to market and promote their respective enterprises due to the
stiff and nearby competition.
Risk tolerance which was also significant, proved to have an encouraging effect
on asset growth, or an increase by .384 percent for every unit increase in risk tolerance.
The link between risk taking and performance is made obvious by this finding. Though
risky strategies and investments can lead to performance variation due to some failures, it
may lead to generate more growth in the long term. (March, 1991; McGrath, 2001)
Hypothetically these firms must take the risks of investing in new products or in
expansion of a new branch. Hence, the enterprises risk tolerance might have greater
potential to inducing small firm growth in assets.
Proactiveness was also found significant in the model. Though the result is
contrary to popular studies in the subject of small firm growth. Philip (2010), suggests
that proactiveness of the enterprise is a key factor to its success while Zahra & Covin,
(1995) postulate that proactive enterprises exhibit growth because proactive firms are
able to create first mover advantage, target premium market segments and charge higher
prices which ultimately leads to growth. Contesting that, this studys regression results
suggest that the enterprises proactiveness exhibits a deterrent effect on asset growth. It is
peculiar to find that a unit increase in proactiveness leads to a .075 percent decrease in
asset growth. Hypothetically firms that exhibit high levels of proactivity should
experience firm level growth. Though that is not the case for the enterprises in this study.
It can be inferred that the proactive efforts of the enterprises in this study led to
insignificant and possibly effects to their asset growth. It is difficult to outdo competitors
in their market industry due to the homogeneity of the products they sell. Moreover since
they do not manufacture their products, they most likely have a common source of supply
that ultimately make it difficult for these firms to proactivity.
The next variable that was found significant is the years of operations of the
enterprise. It also showed to have an inverse effect on asset growth or a .073 percent
decrease in asset growth. Unlike the previous finding in proactiveness, the finding in
years of operations concurred with prevailing studies of small firm growth.
Bhattacharya, (2015) Davidsson et al, (2003) and Segarra & Mercedes (2014) argue that
the age of the firm has a negative relationship with business growth albeit with some
concessions. This research concurs with those studies and found that the younger
enterprises in this study exhibited more growth than the older enterprises.
The study also found hostility significant in the regression model. Surprisingly, it
showed to have a positive effect on asset growth for the enterprises in this study. For
every unit increase in hostility, there is a .106 percent increase in asset growth. Contrary
to the findings of Wiklund, (1998) and other research that suggest hostility of the
environment as a deterrent to small firm growth, the study finds that hostility has a
positive effect on growth. It is possible that the hostility in the environment tend to push
these firms to expand and grow for them to overcome competition and the hostile
environment. As these firms have the largest asset sizes in the local automotive parts
retail market of Cavite, it is possible that the threat of hostility causes them to grow and
increase their market power.
Initial number of full-time employees at the start of business was also found
significant. According to the results, this variable has a positive relationship with growth
in assets. An increase in one initial full time employee at the start of the business leads to
a .079 percent increase in asset growth. This result runs contrary to some studies that
suggest a negative correlation between employee count and firm growth. (Sukin, 2013)
Though this contrast may be explained by the specific time when the employees are
employed in the business cycle. It may be that during the start up cycle for these
enterprises, employees provided the flexibility and allowance for the entrepreneur to allot
time in seeking ways to improve and grow the enterprise. Given the nature of the
business that these firms face, most of their customers require fast and immediate
accommodation to purchase the automotive parts they need. The enterprises employees
are able provide this especially when demand is high.
Second to the last variable found significant is the enterprises ease of access to
financial capital. Although results show a relationship with this and asset growth, ease of
access to financial capital was found to be negatively correlated with growth. A unit
increase in ease of access to financial capital would lead to a .096 percent decrease in
asset growth. Contrary to what contemporary small firm growth studies suggest.
Financial capital is an important resource that is needed for firms to operate and grow.
Even more so, small firms have the tendency to need liquidity and finance the most.
(Hoxha, 2013; Morairu, 2015) Though the results show a negative relationship with
financial capital and growth, this actually mirrors the situation of the micro and small
enterprise sector of the country. Local studies suggest that one of the greatest barriers that
small firms face in the country is the lack of adequate financial capabilities. Small firms
tend to have difficulty acquiring business loans they need for operations and growth.
(Santiago, 2011; Sarreal, 2011; Segarra & Teruel, 2009; SEPO, 2012)
The negative relationship may be due to the smaller enterprises in this study and
their difficulty to acquire financial capital. Since these smaller firms have the most
growth potential compared to the larger firms in this study, they may have exhibited the
most growth. The larger enterprises on the other hand, exhibited high levels of ease of
access to financial capital but their growth was minimal if any due their latter stage in the
business cycle.
The last variable that was found significant is the number of partner
businesses/companies the enterprise has. This variable had a positive effect on asset
growth wherein a unit increase in the number of partners the enterprises has would
increase asset growth by .526 percent. This suggests that this variable is a very important
network resource. Some studies suggest that network resources affect small firm growth
in many ways. This type of resource most often determines the type of competition and
alliances the enterprise faces (Gulati, 1999) and simultaneously determines firm growth
by dependent relational capabilities and building of egocentric networks and
relationships. (Lechner & Michael, 2003)Through this resource, the enterprises in this
study were able to use their business partnerships like that of their ties with other small
and large automotive servicing business and achieve more sales and a larger customer
base.
Table 26
Full Regression Model Result (Asset Growth)
Standard
Variable Coefficient t-statistic Significance
Error
Constant -8.521 4.459 -1.911 .060
INV .079 .611 1.696 .094
RT .384 .885 6.161 .000
PV -.075 .881 -1.780 .079
YOO -.073 .110 -1.686 .096
IC .016 .000 .351 .727
MOE1 .022 .842 .571 .569
MOE2 -.027 .820 -.746 .458
HT .106 .698 2.409 .018
DM .021 .735 .546 .586
HY -.010 .391 -.239 .812
SCC -.029 1.386 -.745 .459
FCC .049 1.189 1.341 .184

FCM .018 1.010 .412 .682
Table 26
Standard
Error
IFE .079 .259 1.802 .076
CFE -.019 .150 -.352 .726
SS1 .007 .898 .185 .853
SS2 .015 2.412 .154 .878
AFC -.096 .441 -1.991 .050
NR1 .526 .796 6.943 .000
NR2 .003 1.217 .048 .961
NR3 .009 .597 .257 .798
CG -.008 .705 -.214 .831
EBM .004 .786 .102 .919
EWM .007 .697 .202 .840
PEB .097 2.171 1.092 .278
TMB .030 .717 .837 .405

MV .038 .560 .985 .328
Table 26
Standard
Error
GI -.025 .786 -.524 .602
GL -.034 .876 -.790 .432
R .934 F-stat 36.975

Adjusted R .909 F-sig .000
Table 27 presents the result of the backward stepwise regression method which
provided an additional significant variable. In addition to innovation (INV), risk tolerance
(RT), proactiveness (PV), years of operation (YOO), hostility (HT), number of initial
full-time employees (IFE), ease of access to financial capital (AFE) and number of
partner businesses/companies (NR1), prior experience starting or running a business
(PEB) moved into the significant circle. Although there was an additional significant
variable, only minimal changes occurred in the model. The R still gave a value of .934
though the adjusted R gave a higher value of .915.
Prior experience starting or running a business proved to be significantly positive
to asset growth. Results show that having experience starting or running a business, is an
effective human capital resource that increased asset growth by .105 percent.
Hypothetically, having experience gave these entrepreneurs the know-how and the
familiarity to business technicalities to avoid unfavorable entrepreneurial mistakes and
situations. Wiklund et al., (2009) stated in their study of small business growth, that
experience, knowledge and skills is the human capital that assist in growing the business.
Though they further suggested that education and training go hand in hand with
experience, education and training were not found significant in this study. The
experience of starting and running a business proved to have a greater impact on asset
growth of these micro and small enterprises.
The results show that the entrepreneurial orientation construct was the strongest
determinant of asset growth. Innovation, risk tolerance and proactiveness which are all
part of the construct, were found to be significant. An increase in innovation and risk
tolerance would lead to an increase in asset growth while an increase in proactiveness
would lead to a decrease.
The next strongest construct that was found to affect asset growth was the
resources construct. Two variables from immediate resources were found significant;
initial number of full time employees and ease of access to financial capital. The number
of business partners, which is part of network resources was also found significant. Lastly
prior experience starting or running a business which is part of the human capital
resource was also found significant. An increase in initial number of full time employees,
and business partners would lead to an increase in asset growth while prior experience
starting or running a business had a positive effect of asset growth. Ease of access to
financial capital had a negative effect on asset growth.
From the organizational dimension construct, only one variable was found
significant; years of operations which showed a negative effect on asset growth while
from the environmental construct, only hostility was found significant and showed a
positive relationship with asset growth.

Table 27
Stepwise Backward Regression Model
Standard
Error
Constant -8.690 4.143 -2.098 .039
INV .078 .550 1.849 .068
RT .388 .834 6.610 .000
PV -.073 .820 -1.869 .065
YOO -.072 .102 -1.771 .080
IC .019 .000 .444 .658
MOE1 .025 .772 .708 .481
MOE2 -.024 .766 -.707 .481
HT .101 .629 2.563 .012
DM .019 .692 .540 .590
SCC -.026 1.250 -.730 .468
FOCC .051 1.123 1.467 .146

FCM .022 .929 .541 .590
Table 27
Stepwise Backward Regression Model
Standard
Error
IFE .075 .238 1.871 .065
CFE -.013 .134 -.271 .787
AFC -.099 .411 -2.199 .031
NR1 .533 .664 8.434 .000
NR3 .009 .558 .264 .792
EWM .009 .627 .288 .774
PEB .105 1.302 1.968 .052
TMB .031 .642 .953 .343

MV .039 .523 1.093 .278
GI -.029 .682 -.697 .488
GL -.033 .820 -.810 .420
R .934 F-stat 50.191

Adjusted R .915 F-sig .000
The attitudes construct showed to be the weakest factor of asset growth for these
enterprises. Motivation, growth importance and goals were insignificant in the full and
backward stepwise regression models. These variables did not show or prove that the
motivation to put a business affected the firms growth. The perception of the
entrepreneurs on different growth aspects like that of growth in sales, assets and
employees also did not affect the firms growth while the entrepreneurs goals for the
business showed to also have an insignificant effect on the firms growth. Despite those
findings, correlation results indicate that growth importance had a significant but weak
positive correlation with growth. Therefore there is still a possibility that the growth
priorities of the entrepreneurs affect the growth of these firms. Refer to table 28 for
correlation results of the attitudes construct.
From the organizational dimension construct, two variables were found
insignificant; initial capitalization and manner of establishment. This shows that contrary
to RBV resource based theories on firm growth, initial capitalization of the enterprise
does not significantly affect the growth of the firm. The enterprises manner of
establishment be it purchased, set up or inherited also appears to have no effect on the
firms growth. On the other hand, looking at the correlational analysis, the study finds
that initial capitalization had a significant but weak negative correlation with growth.
This may suggest that the enterprises with relatively larger initial capitalization grew less
than those with smaller initial capitalization. It is possible that because of their already
large capitalization, room for growth was minimal. Table 29 presents the correlation
results for the organizational dimension construct

From the environmental construct, three variables were found insignificant.
Dynamism, which indicated the measure of change and activity in the enterprises
environment proved to have an insignificant effect with asset growth. Heterogeneity,
which was the measure of diversity in the environment of the enterprise also proved to
have no significant effect on asset growth. Lastly, the income classification of the
municipality or city the enterprises were operating in also did not prove otherwise. These
results show that these enterprises may have faced very similar environments due to them
being in the same industry and business. However, the correlational analysis indicate that
there is a significant but weak positive correlation between heterogeneity and growth.
This suggests that some enterprises were more susceptible to growth by selling
automotive parts that have different levels of competition. Furthermore, correlational
analysis for the income classification of the city or municipality where the enterprise
operates proved to have a significant, strong positive correlation with growth. This may
suggest that some enterprises located in first class cities grew more than those in the
lower income classification. Table 30 shows the correlation results for the environment
construct.
For the resources based construct, most of the variables proved to be insignificant.
Under immediate resources, current full-time employees and source of supply did not
have any significant effect on asset growth. This indicates that the employees that were
hired after the initial start of the business did not prove to affect growth and that local or
imported sources of supply for their automotive parts did not affect growth as well.
However, correlational analysis indicated a significant strong positive correlation

between having both sources of supply and growth. It is possible that some enterprises
exhibited more growth due to having both sources of supply for their automotive parts.
Affirming this is the correlation between only having a local source of supply and
growth, indicating a significant strong negative relationship.
Under network resources, business affiliations and professional advisors proved
to insignificantly affect growth. This suggests that being a part of a business organization
or affiliation and having professional consultants did not substantially affect these
enterprises growth. Despite those results correlational analysis indicate a significant
strong positive relationship between business affiliations and growth. For formal advisors
and growth, a significant but weak negative relationship is seen.
Under the human capital resource, being a college graduate, education in
business management, experience working as a manager and training or seminars in
business management did not significantly affect growth. Although the study found that
the correlational analysis between education in business management and growth indicate
a significant but weak positive correlation. For these enterprises, formal education and
training proved to be unhelpful in their growth. Though a significant portion of the
sample size were college graduates and undergone seminars and training, results show no
clear advantage compared to those without. Table 31 presents the correlational analysis
for the resource construct.

Table 28
Attitudes Construct Correlation
Growth in Assets
Coefficients Pearson Correlation Significance
MV .079 .422
GI .259** .007
GL .047 .636
Table 29
Organizational Dimension Construct Correlation
Growth in Assets
Years of Operation
-.142 .145
-.319** 001
MOE Set up
.049 .616
MOE Purchased
-.009 .929
MOE Inherited
-.047 .634
Table 30
Environment Construct Correlation
Growth in Assets

Hostility
.131 .180
Dynamism
-.055 .575
Heterogeneity
.251** .009
First Class City

.448** .000
SCC
-.203* .037
FOCC
-.183 .060
FCM
-.255** .008
Table 31
Resource Construct Correlation
Growth in Assets

IFE
-.009 .930
CFE
-.089 .366
BSS1
-.538** .000
BSS2
-.139 .155
BSS Both
.782** .000
AFC
-.047 .631
NR1
.920** .000
NR2
.686** .000
NR3
-.200* .040
CG
.126 .198
EBM
.431** .000
EWM
-.011 .915
PEB .792** .000
TMB .043 .659
CHAPTER VI
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
In this study, the utilization of an integrative model to determine small firm
growth was the approach of the research. It allowed the study to combine prevailing
theoretical perspectives and gave the opportunity to evaluate and asses the application of
these theoretical constructs to the micro and small automotive parts retail enterprises in
the local setting of Cavite. Lastly, the approach used made it possible for the research to
carry out its four objectives; (a) describe the profile of top micro and small automotive
parts retail enterprises, (b) describe the attributes of these enterprises, (c) identify the
environmental factors relating to these enterprise, and (d) identify and analyze the factors
that drive the growth of these top micro and small enterprises.
Data was collected in the province of Cavite and consisted a sample size of 106
top automotive parts retail enterprises. The survey consisted of questions that reflected
the different theoretical perspectives. It also took the asset size of the enterprises over five
years which allowed to determine small firm growth. Descriptive analysis was used in
analyzing the relationship between the enterprises average growth and selected
associated variables from the five theoretical constructs. To ascertain the factors that
significantly affect and drive growth, regression analysis was used, particularly Ordinary
Least Squares and Backward Stepwise Elimination Method. The explanatory variables
were also subjected to correlation analysis to asses association with the dependent
variable.
In describing the sociodemographic profile of the enterprises, the study identified
the gender, role of the entrepreneur, age, number of dependents, civil status and location.
Results showed that most of the sample size consisted of male entrepreneurs though
almost half were female. Most of the entrepreneurs were the owners themselves and only
a small portion consisted of entrepreneurial managers. Furthermore, the study describe
the age of the entrepreneurs to be mostly middle aged ranging from 39 to 50. For number
of dependents and civil status, results indicated that the entrepreneurs mostly had zero to
two dependents and that majority were married. Lastly, the study showed that the
entrepreneurs were mostly located in major cities like Dasmarinas and Bacoor.
In describing the attributes of the enterprises, the study identified variables from
the organizational dimension construct, variables from immediate resources, human
capital, and network resources. Findings show that most enterprises were set up and have
five to eight years of operations with initial capitalizations of around 500,000 below and
750,000. Human capital and network resources was found to be low for most of the
entrepreneurs and enterprises respectively.
The study then described the environmental factors of the enterprises. For the
external environment, along with hostility, dynamism, and heterogeneity, were the
variables identified. Along with those was the income class of the city or municipality
where the enterprise was operating. For the internal environment, the variables of
attitudes and entrepreneurial orientation construct were identified. In describing those

variables, the study found that while most were located in first class cities, enterprises
exhibited low, high and average levels of dynamism, heterogeneity and hostility
respectively. For the internal variables, results indicated that most enterprises had high
levels for all the variables of the attitude construct while low, average and high levels
were exhibited for risk tolerance, innovation and proactiveness respectively.
The integrative model developed in this research highlighted some growth
perspectives in its findings, though not all of the theoretical constructs were made
apparent by the model as the results showed. Although most of growth perspectives
mentioned and discussed earlier had shown to have at least one significant variable,
majority of their variables failed to be significantly explanatory and proved to be
inapplicable to be drivers of growth. However, results suggest that entrepreneurial
orientation, years of operations, hostility, initial number of full-time employees, access to
financial capital, partner companies/businesses and prior experience starting or running a
business were strong determinants of asset growth. Results also conveyed that some
insignificant variables in the regression models: growth importance, initial capitalization,
heterogeneity, income classification of city/municipality, source of supply, business
affiliations, professional advisors and education in business management were
significantly correlated with asset growth. In addition, correlation coefficient (r)
portrayed the strength in association of asset growth to the different explanatory
variables.
Results conveyed that risk tolerance and having partner businesses had the highest
positive correlation while having only a local source of supply had the highest negative
correlation. Furthermore, the study found no problem with multicollinearity.
Conclusions
The growth in assets of these top micro and small automotive parts retail
enterprises were driven by some of the factors of the five theoretical constructs discussed
in this paper. The study found that entrepreneurial orientation was the most significant
theoretical construct that affected growth. Results suggest that risk tolerance which is a
variable under entrepreneurial orientation, was one of the biggest factors that affected the
growth of these enterprises. Since all three variables of the construct were found
significant, the study agrees with other research that suggest entrepreneurial orientation
as a strong factor for small business growth.
Resources was the next most significant theoretical construct that affected growth.
Out of the 12 variables, four variables were found significant in the Backward Stepwise
Regression Model. Findings suggest that the number of partner businesses which is a
variable under network resources, was largest factor that drove the growth of the firm.
Partner enterprises and businesses most likely provided the support that is needed for
growth and offset the relatively small size and capitalization of these automotive parts
retail firms. Correlational analysis also reflected that other network resources, such as
business affiliations and organizations has strong positive interdependence with asset
growth, further proving the effectivity of network resources as a river of growth.

The organizational dimension, environment constructs proved to be the least to
significantly affect and drive the growth of the automotive parts retail firms. With only
one variable each resulting to be significant, the two growth perspectives did not
adequately relate to the growth of the firms in this study. For organizational dimension,
out of the three explanatory variables, only years of operation was significant, though
because of its negative relationship with a asset growth, it is not a driver but a deterrent.
For the environment growth perspective, one particularly interesting finding is that
hostility in the relative environment of the enterprise proved to be a driver of growth,
contrary to what recent and contemporary small firm growth studies state.
Unfortunately, the attitudes construct failed to be applicable for the enterprises in
this study. There was no significant variable that affected or drove the asset growth of the
automotive parts retail firms. Drivers of growth for these automotive parts retail
enterprises are difficult to predict due to the many influencing variables and small and
specific sample size of this study. Because of this, a good number of the explanatory
variables proved to be insignificant in the regression models and correlational analysis.
Recommendations
Examining the descriptive analysis of these top micro and small automotive parts
retail enterprises, much can be done in improving the growth of these firms. The three
theoretical constructs; entrepreneurial orientation, resources and environment, proved to
have varied and mixed effects on the asset growth of the enterprises. Each theoretical
construct provided the study with unique and distinct perspectives to approach the small
firm growth of these enterprises and yielded interesting and surprising results.
The entrepreneurial orientation of the firm; particularly innovation and risk
tolerance proved to be significantly positive drivers of growth. The capacity to innovate
and create new and improved ways to sell automotive parts manifested in the growth of
these top automotive retail enterprises in Cavite. The enterprises risk taking abilities also
significantly allowed these firms to take more opportunities for growth.
The resources of the firm produced interesting results. Though most of its
variables were deemed insignificant in the model, findings suggest that some variables of
immediate, network and human capital resources are capable of driving the growth of the
automotive parte retail enterprises. Expanding the enterprises network by being part of
business organizations and creating business partnerships with other entrepreneurs allow
for further growth in the enterprise. Immediate resources and having access to these at the
earlier stages of the enterprise could lead to substantial gains in the short and long run.
Experience and know-how in the business also increases growth opportunities for these
enterprises. With the added knowledge in management and right sources of automotive
parts, these firms would have the capacity to experience growth even more
The environment appears to have complex relationships with asset growth in
these enterprises. To some extent, results in this study are inconsistent with other previous
research. Hostility in the environment for instance, proves to be beneficial for small firm
growth in assets. Being in hostile environments tend to make these enterprises exhibit
more growth than those in less hostile environments. Findings such as these raise an
underlying issues that perhaps the different theoretical constructs affect one another
simultaneously.
Examining the studys attempt to develop an integrative model for growth of these
micro and small automotive parts retail enterprises, much has left to be done for the
improvement of this research. The study includes the fact that the sample size used in this
study is small and very specific. Furthermore, data collected was very informal and
therefore subject to some biases. A better picture or more substantial results may be
produced if a study is conducted using a bigger and less specific sample. Also, for more
accurate and unbiased data, future research in this area can collect data through the
financial statements and other formal business records. Lastly, using Partial Least
Squares Regression can be used to allow for a more integrated model that is more
structural in nature. This would enable the study to examine indirect effects of each
theoretical construct to growth and simultaneously examine each constructs effect on
each other.
In light of the findings of this study, it is recommended that enterprises allow for
R&D by making increased efforts to include newer products in the merchandise that
would significantly improve the growth. Increasing risk tolerance would allow the
enterprise to do this while welcoming more opportunities and investments that would also
lead to growth. Generally the enterprises with smaller asset sizes still have difficulty
gaining access to financial capital despite the recent efforts of the country to micro and
small business financing. Therefore it is recommended that the government and other
NGOs increase the efforts of making this resource available to these micro and small
enterprises. Lastly the study recommends that the local government of Cavite promote
business organizations and management trainings for micro and small automotive parts
retail entrepreneurs to enhance business and management know-how as these have been
found significant in this study.

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APPENDIXES
Appendix A. Number of vehicles registered in Cavite, 2011-2014
Year Registered vehicles Growth rate
2011 101,229
2012 115,589 12%
2013 110,098 -5%
2014 113,147 3%
Source: Cavite Land Transportation Office
Appendix B. Entrepreneurial Orientation Construct Correlation
Growth in Assets
IN .244* .012
RT .889** .000
PR .050 .613
Appendix C. Regression results using Stepwise Backward Method

Appendix D. Correlation Matrix of the independent variables
IN RT PV YO IC ME1 ME2 HT DM HY SC FC FM
IN 1 .185 .360 .362 .187 -.04 .00 .504 .23 .25 -.12 -.04 -.27
RT 1 .11- -.03 -.23 -.07 -.02 .056 .046 .197 -.19 -.22 -.27
PV 1 .178 .305 .075 -.05 .349 .281 .116 -.24 .113 -.08
YO 1 .446 .061 .009 .183 .218 .020 -.02 -.05 -.29
IC 1 .126 -.12 .095 .172 -.15 .06 .108 -.13
ME1 1 -.35 -.16 .185 -.04 -.03 .000 -.00
ME2 1 .028 -.05 -.03 -.01 .022 .032
HT 1 .257 .254 .02 -.06 .010
DM 1 .147 -.08 -.07 -.11
HY 1 -.24 -.07 -.05
SC 1 -.10 -.17
FC 1 -.19
FM 1
IE CE SS1 SS2 AF N1 N2 N3 CG BM EW EB TB MV GI GL
.612 -.01 . .39 -.09 -.0 .25 . -.16 . -.00 .19 .11 .15 .12
IE 1
018 3 044 132 1
-.05 .02 .49 -.10 -.1 .12 . -.26 .06 -.06 .22 .33 .09 .06
CE 1
3 018
SS -.61 .01 -.57 -.5 .13 -.22 -.17 .14 -.54 -.08 .01 -.0 -.09
1
1
SS .036 .80 .73 -.20 .14 .25 . .91 . -.04 .25 .026
1
2 062 017
AF 1 -.00 -.1 .21 .1 -.20 .07 .03 .09 .30 .39 .21
N1 1 .69 -.20 .13 .43 -.03 .77 . .024 .29 .071
045
N2 1 -.08 .14 .41 .05 .71 .07 -.10 .20 -.01
-.03 -.14 .04 -.23 . .021 .08 -.05
N3 \ 1
036
CG 1 .163 -.11 .12 .25 -.06 .04 .04
-.02 .28 . .053 .19 -.01
BM 1
007
EW 1 .04 .03 .05 .13 .11
EB 1 -.0 -.01 .29 .07
TB 1 .08 -.0 .03
MV 1 .24 .26
GI 1 .49
GL 1
SURVEY QUESTIONNAIRE
Greetings!
I am Miguel Sandoval of De La Salle University - Dasmarias, from the College of

Business Administration and Accountancy. I am currently working on my thesis entitled
Drivers of Growth of Top Micro and Small Automotive Parts Retail Enterprises in Cavite
and would like to ask for your support to answer my survey questionnaire. Kindly answer
everything honestly and completely. Rest assured that any information will be handled
discretely and strictly for the sole purpose of the thesis.
I would like to thank you for the time you will share in answering this survey.
God bless you and your family!
The Researcher
Instructions: Please answer the following questions. Write your answers on the blank
provided. Otherwise please put a check mark (/) on your choice whenever appropriate.
Instructions: For the next items, please indicate your agreement or disagreement with the
following statements by using the following scale;
1 Strongly disagree
2 Disagree
3 Neither disagree nor agree
4 Agree
5 Strongly agree
Please put a check mark in the box for your answer.


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De La Salle University Dasmarias

DRIVERS OF GROWTH OF TOP MICRO AND SMALL

MIGUEL JOAQUIN S. SANDOVAL

countrys economy. According to the Organization of Economic Cooperation

reduction efforts. These enterprises performance is essential in the development of the

significantly employment in the local economy. In fact, according to the Department of

11.2% or 553,097 by medium enterprises.

According to DTI, as of 2012 count, there are 944,897 business enterprises

establishments is accommodation and food services. Second to the least is manufacturing

technical, education, administrative and support services, arts, entertainment and

recreation industries, and real estate with 105,927. (DTI, 2014)

government to lower business costs and transactions to provide complimentary support to

In a similar study conducted by Philip, (2010) majority of the worlds businesses

driving forces to the development of a market economy. According to Morariu (2014)

Acknowledging the staggering increase of research and studies conducted about

complement other research in the hope of obtaining a deeper understanding on the

phenomena of micro and small enterprises and their growth.

Background of the Study

operation in 2012 with 210,576 business establishments. It is seconded by Region 4-A

(Calabarzon) with 144, 811 business establishments, followed by Region 3 (Central

Luzon) with 105,331 business establishments followed by Region 7 (Central Visayas)

establishments. (DTI, 2014) Furthermore, majority (49.7%) of the enterprises in the

The automotive industry sector in the Philippines is booming. With the

Philippines currently ranked third on the fastest-growing automotive markets in Southeast

To add, the Comprehensive Automotive Resurgence Strategy program established

According the president of the Federation of Automotive Industries of the

compared to other neighbouring ASEAN countries. Second, borrowing cost is going

to the very tight competition.

detail at table 1. (CaviteGov, 2015)

Philippines. With the automotive market looking to be very competitive by 2020,

affect the performance and success of these firms. Furthermore it is important to

A study done by Mendoza (2015) described the financial health of 99 SMEs in

strategies to maximize profit.

qualitative perspective as well. Sarreal (2011) researched the determinants of growth of

affect business success of small and medium enterprises in Bangladesh, a developing

way of doing business, management know-how and, external environment.

small automotive parts retail enterprises in Cavite Philippines.

Statement of the Problem

In the 2011-2016 Philippine Development Plan published by NEDA, it stated that

low value to the local economy. (SEPO, 2012)

types of operations. It is these cottage industries particularly in the region 4A

information and knowledge on the market and industry.

enterprises remaining small. As a result the countrys industry structure is often

characterized by a missing or hollowed middle.

necessary for their improvement of their products. (Aldaba, 2007)

in Cavite and the characteristics or drivers that promote it.

the problems that these firms face.

Specifically, the study aims to answer the following questions

parts retail enterprises in Cavite?

automotive retail enterprises in Cavite?

Objectives of the Study

The main objective of the research is three-fold; it is to provide a better

Cavite, to develop a growth model that would be applicable to these enterprises

themselves is key to arriving at a definitive conclusion to the main objective of the

to the development of these firms.

enterprises in terms of:

and number of dependents.

enterprises in terms of:

access to financial capital

and initial and current number of full time employees.

3. To ascertain the environmental factors of these micro and small enterprises in

Income classification of city or municipality

top micro and small automotive parts retail enterprises in Cavite.

Hypothesis of the study