Entrepreneurial Competency

Sales Orientation Decision Making skills Type of industry (food)

Net working Financial literacy Marketing Orientation

Financial Literacy

Financial literacy is widely recognized as a vital entrepreneurial competency that enables small
business owners to make sound financial decisions and effectively manage their resources.
Rahmandoust et al. (2011) emphasized that knowledge and skills in financial literacy are among
the essential factors contributing to entrepreneurial success. Entrepreneurs who lack financial
literacy often struggle with understanding key financial concepts such as budgeting, interest
rates, and cash flow, which are necessary for day-to-day business decisions. According to
Agustina et al. (2020), the ability to analyze financial ratios—such as liquidity and profitability—
is crucial in evaluating overall business performance and guiding appropriate strategic actions.
In support of this, Lideke-Freund et al. (2018) stated that the analysis of financial statements
plays a key role in identifying risks, making investment decisions, and sustaining operations.
Thus, without sufficient financial literacy, entrepreneurs may misinterpret financial data, leading
to poor decision-making and potential business failure.

Marketing Orientation

Although entrepreneurial activity in the Philippines continues to grow, many MSMEs still
struggle to sustain operations beyond the start-up phase. According to the World Bank (2016),
nearly one-third of new SMEs globally close within two years, and only 10% of surviving
enterprises grow after the start-up stage. These patterns suggest that gaps in entrepreneurial
competencies—such as decision-making, financial literacy, and marketing orientation—may
contribute significantly to the failure of small businesses.

Types of Industry

The food industry remains a highly attractive sector for entrepreneurs due to its broad value
chain and investor confidence. Entrepreneurial opportunities are often reflected in investor
behavior, and a high number of investments in specific steps of the food value chain suggests
that start-up investors perceive these areas as promising. This trend is evident in data from the
Dow Jones VentureSource, which tracks investor activity in Europe and the United States (as
cited in Kuckertz, Hinderer, & Röhm, 2019). These patterns imply that the food industry offers a
strategic environment for entrepreneurial ventures, particularly for start-ups aiming to enter
scalable and opportunity-rich markets.

Decision Making

Decision-making is a vital entrepreneurial competency that affects business outcomes.

Entrepreneurs face various risks such as declining profits, equipment failure, and liquidity issues.
Anderson (2013, as cited in Blundo et. al) highlights the need for a risk management plan to
identify and address internal and external threats. The ability to anticipate and respond to these
risks reflects sound decision-making. Start-ups lacking this skill are more likely to make poor
choices, leading to failure. Thus, risk awareness is a key element of effective entrepreneurial
decision-making.

Net Working

Entrepreneurs rely on social networks to access valuable resources, knowledge, and

opportunities that support business growth (Aftab et al., 2022a; Liao & Barnes, 2015). Through
these networks, they build relationships with key stakeholders such as customers, suppliers,
investors, and regulators (Dossou et al., 2023). Networking helps identify opportunities, gain
support, and solve business challenges (Peruchi et al., 2022; Kerr & Mandorff, 2023). Strategic
use of these networks can lead to improved stakeholder engagement and overall business
sustainability (Rakshit et al., 2022; Gast et al., 2017).

References

[Link]

World Bank. (2016). Keynote Speech by Cecile Fruman: Increasing Philippine SMEs’ Participation
in Global Value Chains. Retrieved from
[Link]
increasing-philippine-smes-participation-in-global-value-chains

Kuckertz, A., Hinderer, S. & Röhm, P. Entrepreneurship and entrepreneurial opportunities in the
food value chain. npj Sci Food 3, 6 (2019). [Link]

Settembre-Blundo, D., González-Sánchez, R., Medina-Salgado, S. et al. Flexibility and Resilience

in Corporate Decision Making: A New Sustainability-Based Risk Management System in
Uncertain Times. Glob J Flex Syst Manag 22 (Suppl 2), 107–132 (2021).
[Link]

Riaz, S., Yanqing, W., Ishaq, M. I., Raza, A., & Siddiqui, R. A. (2024). Role of social networks and
entrepreneurial success: Understanding the dynamics of knowledge acquisition and green
entrepreneurial orientation. Journal of Cleaner Production, 468, 143065.
[Link]
Enterprise Risk Management on Business Performance: A Quantitative Analysis of Local

Businesses in Surigao del Norte, Philippines

According to SARANZA, Cris et al. (2024) The study aimed to assess Enterprise Risk Management
(ERM) observance and performance variables among local businesses, conducted through non-probability
purposive sampling. Utilizing statistical tools like mean, standard deviation, analysis of variance, and
Pearson rho, the study revealed a concentration on grocery owners (43%) and businesses operating for 6
to 10 years (52%). ERM observance exhibited a strong commitment to compliance, financial, operational,
reputational, and strategic practices, while performance, rated very high, encompassed financial, customer
satisfaction, and market share factors. Significantly, the study identified a positive relationship between
financial ERM observance and overall performance. The study emphasized business owners' dedicated
ERM commitment, positively influencing business performance. Thus, fostering teamwork, incentivizing
ERM adherence, disseminating ERM knowledge, and encouraging continuous learning, aiming to
establish a robust ERM framework for proactive risk mitigation and strategic decision-making.

Strategic Marketing Decision Making: Evidence from a Philippine Micro Enterprise Perspective

Joyce Ann A. Bait, Minchu R. Decena, and Melanie B. de Ocampo (2019) Despite the continuous growth
of micro, small, and medium enterprises (MSMEs) in the Philippines, existing literature highlights their
persistent struggle with unsatisfactory firm performance, largely due to poor strategic marketing
decisions. Utilizing Jocumsen’s (2004) model for the strategic marketing decision process, we examined
how MSME business owners navigate decision-making through defined steps, methods, and contextual
influences.

Employing a qualitative case study approach, we conducted in-depth interviews at LMT Enterprises, a
micro-firm in Davao City, Philippines. Through descriptive analysis, we identified both similarities and
deviations from Jocumsen’s proposed framework. Our findings confirm the presence of a strategic
marketing decision process at LMT Enterprises, particularly for major investments, including process and
product innovations, employee capability development, and diversification.

FINANCIAL PERFORMANCE OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES)

IN THE PHILIPPINES

Rufo R. Mendoza (2015) The study examined the financial performance of selected micro, small, and
medium enterprises (MSMEs) by analyzing secondary data from financial statements over the past three
years. Findings indicate that while these enterprises demonstrated strong liquidity, activity, and leverage,
their profitability remained low.

Correlation analysis revealed significant linear relationships between liquidity and activity, liquidity and
leverage, and activity and leverage. However, none of these financial measures showed a significant
relationship with profitability. Further t-tests indicated no significant differences in liquidity, profitability,
and inventory turnover when MSMEs were grouped by organizational form, business type, and asset size.
In contrast, significant differences were observed in receivable turnover, asset turnover, and debt ratios.
The study recommends that MSMEs reassess their strategies to enhance profitability and integrate
financial performance insights into their decision-making processes. Additionally, businesses should align
their financial performance with broader external economic factors to sustain their contribution to
economic growth.

The Role of Entrepreneur Characteristic and Financial Literacy in Developing Business Success

According to Mohamad Nur Utomo(2021) Small and Medium Enterprises (SMEs) play a vital role in
economic development, particularly through job creation and the absorption of workers. Increasing
employment and reducing unemployment are achievable only when SMEs successfully manage the
sustainability of their businesses. This research aims to empirically examine the factors influencing SME
business performance, focusing on entrepreneurial characteristics and financial literacy.

Primary data for the study is collected through questionnaire distribution to selected respondents. The
research sample consists of SMEs in Tarakan City, and the analysis is conducted using Partial Least
Square-Structural Equation Modeling (PLS-SEM).

The findings indicate that personal characteristics, psychological traits, entrepreneurial competency, and
financial literacy significantly influence SME performance. From a theoretical perspective, the study
supports both Upper Echelon Theory and Resource-Based View (RBV) Theory in explaining the
determinants of business success.

References:

[Link]

[Link]
90605208/7nbmc_conference_proceedings_issn_2345_8720.pdf#page=638

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 Financial Variable

Market Variable
What are the factor
affecting the business
to fail?

Operational Variable

Regulatory and
compliance variable