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Research Article

Correlation Between Marketing Strategies and Financial Performance of Micro Small
Medium Enterprises in Isabela, Philippines

Eva U. Cammayo , Exequiel M. Perez b
a
b
a AssociateProfessor , Asst. Professor
a,b Isabela State University, Echague, Isabela, Philippines
ArticleHistory:Received: 10 January 2021;Revised: 12 February2021;Accepted: 27 March 2021;Published online: 28
April2021
Abstract:.Micro Small and Medium Enterprises (MSMEs) account for 99.56% of the economy. They employ 62.8% of the
workforce, unfortunately they contribute only 35% of the Gross Value Added (GVA) and 25% of the Philippine export.
They remain far less productive than large firms. Notwithstanding the high rate of entry into the entrepreneurship activity,
the failure rate is the highest in ASEAN leading to very low established business rate.
This study aims to determine the financial performance of MSMEs, the level of implementation of marketing strategies and
the relationship that exists between the financial performance and marketing strategies. The study uses the descriptive-
correlational research method. There were 224 MSMEs involved in the study. These were selected from the different
municipalities where MSMEs are prevalent. The survey questionnaire was utilized to record the interview from the
respondents.

It was found out that the financial performance of the MSMEs is "poor". with an overall score of 55. They are wanting in
managing their receivables. they also have very low rate of return; they also have low survival rate because of their low
rating on stability. In the context of marketing strategies, it was found out that MSMEs have very low rate of adoption of
modern marketing strategies. They still employ the traditional way of enticing their customers. Lastly, it is found out that
modern marketing strategies have significantand direct relationship with the MSMEs financial performance.
Keywords: MSMEs; financial performance; marketing strategies

• Introduction
Enterprises are the foundation of the economy. They are eyed not only to contribute to the majority of value
added in production but they are also expected to provide the employment for workers. The Philippines
envisions the reduction of poverty from 21.6 percent in 2015 to 13-15percent in 2022. Through the Micro Small
Medium Enterprises (MSMEs) sector, the government is hopeful in the achievement of inclusive growth.
In the Philippines, 99.56 percent of firms are MSMEs of which 90 percent are micro; 9.6 percent are small
and only 0.4 percent are medium (DTI 2017). They account for 62.8 percent of employment, unfortunately, they
contribute only 35 percent of gross value added (GVA) and only 25 percent of the Philippine export. This
indicates that large firms are significantly more productive than the MSMEs. This also puts the MSME
workforce at a disadvantage compared to workers in big businesses as productivity is observed to have positive
relationship with employee benefits.
The MSME sector remains far less productive than large firms due to several challenges such as access to
finance (Harvie et al, 2013; Chittithaworn et al., 2011), access to technology (Thong and Yap, 2015), access to
markets (Rogerson 2013; Kivue&Ofafa, 2013; Abor and Quantey, 2010),Many MSMEs cannot attract highly
competent labor due to their low productivity.
The Philippine MSME Development Plan 2017-2022 provides greater opportunity to help start-up
enterprises sustain, expand and internationalize their businesses and thereby become smarter entrepreneurs.
MSMEs in the province of Isabela, Philippines need to flourish for them to attain their economic (economic
growth and development) and social objectives (poverty alleviation and improved standard of living).
Despite the promising entrepreneurial outlook which is indicated by high rate of entry into the
entrepreneurship activity; with the number of business registrations which dramatically increased from 900,000
in 2017 to 1.30M as of December, 2018 and 1.42M in May, 2019, the failure rate is the highest in ASEAN
leading to very low established business rate. (World Bank report, December, 2019).
Under this premise, the researchers deemed it important to conduct investigation on the strategies and
performances of the MSME sector in the province of Isabela in order to determine the different strategies that
would be implemented by the owners and managers to help improve the value of each enterprise.

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